New Jersey: ACA enrollment could go up 9% thanks to minimum wage increase

One of the interesting quirks of how the Affordable Care Act's enhancement of our crazy patchwork heatlhcare system works is that there's something of a zero-sum game when it comes to enrollment numbers.

For instance, Virginia's ACA exchange enrollment numbers dropped by 18% this year, from 400,000 to 328,000, due primarily to the state finally getting around to expanding Medicaid to enrollees earning less than 138% of the Federal Poverty Level. Since people earning between 100-400% FPL are eligible for ACA subsidies if they enroll through the exchange, that means there's an overlap for those in the 100-138% range which these folks fell into. The same thing happened in Louisiana, even more dramatically, after they expanded Medicaid halfway through 2016...the following year exchange enrollment dropped by 33%.

When this happens, it's actually a good thing, not just because Medicaid generally provides better coverage to these folks while costing them less (or nothing at all, depending on the state), but because the bulk of the new Medicaid enrollees are those who earn less than 100% FPL...the so-called "Medicaid Gap" population.

Sometimes, however, the opposite situation can happen...and it can still be for a good reason: Case in point: New Jersey:

Some 24,000 lower-income New Jersey workers could lose their Medicaid coverage as a result of the state’s new minimum-wage increase, according to a report the Urban Institute will release today.

Oh no, that sounds terrible! But there's a pretty simple reason for it...

But the Washington, D.C.-based researchers also found all these individuals would instead qualify for coverage through the Affordable Care Act’s health insurance marketplace. And many would get government help to pay some or most of the additional costs, the advance copy of the report provided to NJ Spotlight notes.

The group in the potential “coverage gap” makes up less than 3 percent of the more than 810,000 workers who will eventually benefit from the new pay policy, the institute found. But some New Jersey officials are already looking at ways to ensure those residents don’t lose healthcare coverage. The change in the minimum wage from $8.85 an hour to $15, which will roll out incrementally through 2024, was enacted in February.

There's no great mystery here: If you currently earn $8.85/hour for, say, 30 hours a week, that's around 1,560 hours/year total or $13,800 per year...or 110% FPL. If your pay rate is increased to $15/hour and you keep your job with the same number of hours, your income jumps to $23,400/year or 187% FPL. Thus, you've been shifted from completely-subsidized Medicaid to a mostly-subsidized ACA exchange plan.

It's important to note that the increase is being phased in over five years, so this does not mean that all 24,000 would jump over the 138% threshold at once, but New Jersey enrolled 255,000 people in exchange plans this year, so assuming all 24,000 eventually did make the move, that'd be a 9% enrollment bump.

...Part of that fix could come from Sen. Joseph Vitale (D-Middlesex) who is working on legislation likely to involve a combination of outreach assistance — to ensure these workers are aware of their coverage options — and possibly additional funding to help cover extra costs. “We’re mapping out a plan to protect people,” he said.

In addition, the state budget includes a requirement that the Department of Banking and Insurance (DOBI) thoroughly study what the state can do when designing the new individual insurance marketplace to help workers who become ineligible for Medicaid as a result of the wage increase. (DOBI was unable to provide an update on this process late Wednesday.)

Both of these are important. Just because 24,000 people suddenly find themselves earning too much to qualify for Medicaid doesn't mean all of them necessarily know that they qualify for ACA subsidies instead...and if they've been on Medicaid continuously for years, they've likely never gone through the exchange enrollment process at all and are unfamiliar with how it works.

The part about "possible additional funding" is intriguing...that sounds a lot like the supplemental subsidies provided by both Massachusetts and Vermont to lower-income exchange enrollees. Of course, you can only do that if you operate your own fully-featured exchange platform, which is why it's a good thing that...

The department is now in the process of building its own marketplace, or exchange, a system created through the ACA to help provide coverage to all residents who do not qualify for Medicaid and can’t access insurance through work. New Jersey’s system is now run by the federal government. The new one — which is scheduled to be available in some form later this year — is to be integrated with the Medicaid enrollment system.

...According to the Urban Institute’s study — the first to look at the impact of a state wage change — of the 810,000 workers expected to benefit from the change, 250,000 currently qualify for Medicaid.

However, the report notes only about a quarter of these individuals are currently using this benefit; more than half now have private insurance and nearly 18 percent are uninsured.