Testimony Before the Senate Health, Human Services, and Senior Citizens Committee
May 15, 2008

Concerning NJ Family Care and Health Insurance Reforms - S 1557
Presented by: Jim Leonard, Senior Vice President Government Relations

Thank you Chairman Vitale and members of the Senate Health, Human Services, and Senior Citizens Committee. My name is Jim Leonard and I appreciate the opportunity to comment on Senate Bill 1557.

On behalf of the employers who make up the State Chamber and the local and regional chambers of commerce that make up our chamber network, let me congratulate you on moving forward with this important piece of legislation and voice our support for this initiative. Given the fact that employers are the backbone of the U.S. health insurance system, providing health benefits to nearly 175 million Americans, your efforts to include the employer community in this reform effort are appreciated.

New Jersey and for that matter the entire nation is in a health insurance crisis. We have 1.4 million residents who are uninsured, a number that is not only an economic anvil hanging around the neck of the state but frankly an embarrassment for a civilized society. The uninsured are our neighbors, our colleagues, and our friends. For a variety of reasons they find themselves without health insurance, and this legislation takes significant steps towards improving the situation.

The overall goal of the Chamber’s Health Care Coalition is to work to create a health care system that is accessible, accountable and affordable. Health care is one of the single largest cost drivers for the business costs today. Its lack of affordability for both employers and employees has resulted in roughly half the state’s uninsured being full time workers. Rising health care costs are placing a huge strain on our employer-based health insurance system. Premiums rose 87 percent between 2000 and 2006, with wages growing only 20 percent during the same period.

Increases in premiums force employers into a no-win situation. They can either eliminate coverage for their employees, reduce coverage, ask the employee to pay a greater portion of the cost, or absorb the increase and reduce other benefits like pension payments or capital expansion. And with family health insurance averaging more than $1,000 per month, cost is a significant issue. Some economists have even forecast that health insurance costs will overtake profits this year – not something we need in this economy.

New Jersey faces a transformational opportunity in the health care arena. The status quo is unacceptable. That is why we support many of the components in S 1557 including:

• The mandate for those 18 and under to have health insurance. While this might have an up front cost to the State, the savings will easily outweigh the expense.
• The enrollment initiative for taxpayers reporting no coverage but eligible for public coverage.
• We believe these steps, along with the expansion of coverage for parents up to 200 percent of poverty level, will dramatically increase the number of insured and lessen the cost shifting the currently serves to drive up the cost of health insurance.
• We support the changes in the individual and small employer insurance markets including the change of the rating band, the reduction of standard plans to 3, the step to allow riders of both increasing and decreasing value, the movement of governance of the plans to the Department of Banking and Insurance, and the added transparency associated with producer commissions.

In terms of making the bill even better, the State Chamber suggests that amendments be added to address the Medicaid reimbursement rate. Government under-funding of health care benefits is increasingly recognized as a major contributor to the rising cost of private insurance. Cost shifts of any nature lead to lower pay increases and a higher percentage of sharing of the cost by employees.

We would also suggest that some mechanism to deal with high cost claims is in order. Grants are currently available from the federal government to help fund high-risk pool losses.

The State Chamber feels that the addition of some way to address cost drivers and encourage personal responsibility in the health arena would also make this bill stronger. More resources need to be provided to promote healthy behaviors. Increased attention must be given to preventive care amongst all employees and family members.

That being said, the absence of these items does not mean this bill has less significance. The State Chamber applauds Senators Vitale and Singer for introducing this legislation that will make dramatic strides toward decreasing the number of uninsured residents in New Jersey while at the same time working to lower the overall cost of health insurance for everyone.

Thank you for your time, and I would be happy to take any questions from members of the Committee.