N.J. Requires Residents to Have Health Insurance

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A century of federal efforts to offer near-universal health care culminated with the 2010 passage of the Patient Protection and Affordable Care Act. After months of arguments over politics and policy, the legislation signed by Barack Obama actually reached 2,700 pages, nine major sections and 450 some provisions.

It would not be unfounded to suggest that the first African American president and his signature legislative achievement triggered one of the great mass resistance movements in American history. To be sure, resistance has been a hallmark in American politics since the beginning, but the turbo-charged conspiracies on the Internet broke new ground for the new century. The law was to be the vehicle for sending the elderly to “death panels” and to usher Shariah law to America.

But as the kooks and cranks faded, legal controversy persisted in the form of multi-year lawsuits, some based a merit, others politically motivated. Of the many controversial aspects of the law was the requirement that most Americans be covered by a health plan providing “essential benefits” or be subject to a modest tax.  Fifteen percent, or about 40 million Americans were uncovered at the time, most were covered by an employer-sponsored plan, Medicare, Medicaid or other plan.  

The policy that all Americans be required to have a health policy was first concocted by the Heritage Foundation as a way of preserving the commercial insurance industry. It was wholeheartedly adopted by the Republican governor of Massachusetts as the linchpin for ensuring a sustainable risk pool of healthy and sick consumers and to spread the cost of the most expensive medical care.

Uncontroversial as a pro-industry reform, when codified in the Affordable Care Act, the tax became the rallying cry of the Republican Party and for many on the “lunatic fringe” (Theodore Roosevelt’s phrase, not mine), the coming of the American fascist state or, perhaps, the Antichrist.  

In 2012, the U.S. Supreme Court upheld the tax. But since them, opposing the Affordable Care Act has launched and sustained thousands of political careers, including that of the current president, Donald Trump.  Supporting the law has launched and sustained thousands more, including that of New Jersey’s current governor, Phil Murphy.

So as a federal tax overhaul eliminates the healthcare tax in 2019, New Jersey has enacted its own tax, effective in 2019. The law calls for the Treasury Department to set up a program to collect penalties from residents who pay income tax but do not have essential health benefits coverage, starting January 1. Treasury officials would be required to notify taxpayers of this new law by the end of November, 2018.

According to a fiscal analysis of the bill by nonpartisan legislative staff, the penalty is to be calculated based on the current federal formula, which calls for a tax of 2.5 percent of an individual or family’s income, or $695 per adult and $347 per child -  whichever is greater - for a maximum family penalty of $2,085. The penalty is designed to increase each year that someone is not covered but can’t exceed the price of a lower-cost “bronze-level” health plan, which averaged just under $3,300 in 2017, and has been increasing at close to 10 percent annually.

Data from the Internal Revenue Service from 2015, the latest year available, found that nearly 189,000 Garden State residents paid more than $93 million total in federal ACA tax penalties that year, according to the legislative review. The year before, 221,000-plus residents paid over $51 million in penalties, although the reasons for the changes are not clear. Both the current federal measure and the new state law include a hardship exemption for those who can demonstrate they are unable to pay.
The tax was pushed by both health advocates and business groups, including Better Choices Better Care NJ, whose members include the N.J. Chamber of Commerce and the N.J. Business & Industry Association, and is funded by Horizon Blue Cross Blue Shield, the state’s largest insurance company.

Penalties collected from non-compliant residents that cannot prove an exception are deposited into a fund created by companion legislation. Monies from the fund will be used to offset costs to insurers who face spikes in treatment costs. This too is modeled after the Affordable Care Act and was dubbed a bailout to the insurance industry by the Trump Administration and ultimately discontinued.

So, New Jersey now has its own version of the Affordable Care Act, pushed by mainstream business lobbyists and the state’s biggest insurance carrier, and the vast majority of state residents can care less.  After years of conspiracy theories, political distortion and litigation, another ironic chapter in the long running story of healthcare in America.