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Rutgers expert explains New Jersey's healthcare individual mandate

<p>New Jersey, under the administration of Gov. Phil Murphy (D-N.J.), passed a penalty on people who do not purchase health insurance. It is identical to the previous federal version.</p>

New Jersey, under the administration of Gov. Phil Murphy (D-N.J.), passed a penalty on people who do not purchase health insurance. It is identical to the previous federal version.

New Jersey became one of the few states in the nation to pass an individual mandate requiring residents to buy health insurance or pay an additional amount on their state income tax. 

Michael Gusmano, an associate professor of health policy in the School of Public Health, gave some insight to the law’s effects in an interview with The Daily Targum.

“The Patient Protection and Affordable Care Act (ACA), when passed in 2010, included an individual mandate,” he said. “Which meant that people had to either pay insurance or pay what the law called a penalty.” The Supreme Court later identified the penalty as a tax added to the federal income tax. 

When the federal Congress passed a new tax law that eliminated the penalty or tax associated with the individual mandate, Gusmano said many scholars think the desire of people to have health coverage coupled with financial subsidies available through the ACA drives most people to sign up and purchase insurance.

“Many states became concerned for people who did not have to pay insurance,” he said. “Particularly healthier, younger people, might decide to drop out and not purchase insurance. That would destabilize the risk pool and that would make insurance much more expensive for people who really needed care.”

Gov. Phil Murphy (D-N.J.) proposed, and the state legislature accepted, a state penalty of equal amount to what the federal government enforced in the past. Gusmano said the penalty would be charged through the state income tax. 


The ACA organized a federal health insurance marketplace, Gusmano said, which allowed people to buy qualified health plans. That also means the plans meet the requirements set by the federal law. 

The marketplace works as an online exchange, allowing people to look at and compare different health plans available. The plans can differ on coverage, network and price. 

New Jersey is one of the states that has joined and is currently in the federal marketplace, Gusmano said. 

“I think the marketplace in New Jersey is quite robust and quite stable,” Gusmano said. "The state has done outreach to encourage people to sign up for insurance."


"If the ACA is repealed, there will be a dramatic increase in the number of people without insurance, and likely the number of people who declare bankruptcy due to health care costs," Gusmano said. "The ACA has its problems, like its implementation issues and expenses, but overall it has been a success," 

Those who oppose the ACA, such as the Republican Party, said the plan has increased drug prices by increasing taxes and requiring lower prices for people on Medicare and Medicaid. 

The GOP’s website also said insurance offered through government exchanges can limit patients’ access to their own doctors through narrow networks and restricted drug coverage. They want to replace the ACA with a program that limits federal requirements and supports consumer choice.

The state’s individual mandate shows how states influence the health care system, Gusmano said.

“State governments play an incredible role in our federal system,” he said. “We spend a lot of time with what Congress does with federal policy. But if you really want to understand what is happening with health policy in the U.S., you have to pay attention to states.”

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