New Jersey Governor Vetoes Health Insurance Exchange Bill

New Jersey Governor Vetoes Health Insurance Exchange Bill

Governor Chris Christie vetoed legislation on May 10, 2012 that would have mandated the formation and development of a "health insurance exchange" in the state, as contemplated under the federal Patient Protection and Affordable Care Act (the "Act"). The Act establishes health insurance exchanges as the vehicle for individuals and businesses to access care and comply with the Act's "individual [insurance] mandate."

Health insurance exchanges are essentially marketplaces that administer the offering of health insurance to individuals and small employers. The New Jersey legislation would have established an online marketplace to buy federally subsidized health insurance, starting in 2014.

The Governor's veto cited uncertainty surrounding "the jurisdictional mandate to establish an exchange," as well as "the individual mandate to procure health insurance," arising from the pending constitutional challenge to the Act in the Supreme Court of the United States. The concerns specifically identified by Governor Christie included:

  • Committing New Jersey to establishing and operating a new Medicaid-like program for individuals between 133 and 200 percent of the federal poverty level, without any assurance of the level of federal funding that would be available to support such a plan. 
  • The mechanism for certifying health plan participation in the exchange limiting the pool of plan participants, likely reducing options and increasing costs.
  • The composition of the proposed exchange's board of directors lacking representation by all stakeholders and providing a salary of $50,000 to each board member, further increasing implementation expense.

Each state can develop its own exchange or join a regional exchange under the Act, but if they fail to do so by 2014, the Act authorizes the federal government to create an exchange for them. A decision on the constitutionality of the Act is expected from the U.S. Supreme Court in June, with respect to which, Governor Christie has stated that he intends "to fully oversee New Jersey's compliance in a responsible and cost-effective way."

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