NEW JERSEY TAKES A PRIVATE ROAD TO COVERAGE FOR CHILDREN

Volume 29, Issue 507 January 22, 2008

Anna Wolke

In this time of tight budgets and uncertain SCHIP funds, New Jersey has devised a creative way to increase health coverage to children—at virtually no additional cost to the state or federal government.

Beginning this January, families whose income is too high to enroll their children in New Jersey’s SCHIP—that is, above 350 percent of the federal poverty level (FPL)—will be able to buy into this new arm of SCHIP. Tentatively named FamilyCare Advantage, the program will provide children with the same benefits as the state’s SCHIP (FamilyCare), at significantly lower costs than families would typically have to pay in the private market.

Sponsored primarily by Senator Joseph Vitale (S. 2236) and enacted in 2005, FamilyCare Advantage is expected to extend coverage to 15,000 children. It is only one of several steps needed to achieve the long-term goal of universal health coverage, said Senator Vitale. The new program “makes affordable coverage available,” he said. “It’s a first step.”

The program came together in December 2007, when the state reached an agreement with Horizon Blue Cross Blue Shield of New Jersey to allow families with qualifying incomes to buy Horizon coverage for their uninsured children. Horizon, which has participated in the Garden State’s SCHIP since its inception, is the sole insurance carrier for the statewide buy-in program. The state is hoping to include other carriers in the future.

Families will be responsible for paying the full premiums, but rates will be significantly lower than the average private insurance plan. This is due in part to the fact that the policies are being offered exclusively to children, whose health expenses are typically lower than those of adults. The monthly premium for insuring one child will be $137; for two children: $274; and for three or more children: $411. Horizon has said it will absorb about $1 million in initial program costs in the first year.

Both Pennsylvania and Illinois have instituted similar programs but those states base the cost of premiums on a sliding income scale.

To prevent families from dropping existing coverage, parents will have to demonstrate that their child has been uninsured for at least six months before enrolling. Families with more than one child will be required to enroll all uninsured offspring in the program.

CMS Ruling Could Have an Affect

The legislation that created FamilyCare Advantage also included several other measures to reform New Jersey’s SCHIP, such as streamlining the application process and reversing the previous governor’s freeze on covering parents through FamilyCare.

Because the buy-in program does not rely on any federal funding, it is not directly affected by new federal rules that may limit SCHIP enrollment. Last August, the Bush administration issued a directive requiring states to enroll at least 95 percent of their SCHIP- and Medicaid-eligible children under 200 percent FPL before expanding coverage to those above 250 percent FPL.

New Jersey is challenging the Administration on both of these issues. Last October, the State asked a U.S. District Court to bar the Centers for Medicare & Medicaid Services (CMS) from enforcing the administration’s August rule. New Jersey currently offers SCHIP coverage to children from families earning up to 350 percent FPL, a policy for which it had previously received federal approval. Governor Jon Corzine says that approximately 10,000 children could lose SCHIP coverage if the rules go into effect this summer, as planned. A handful of other states have joined New Jersey’s pending lawsuit against the federal government.