The study found that while New Jersey enjoys high-quality health care, health care costs have been rising sharply for nearly a decade.
TRENTON – The Murphy Administration today released three reports assessing the quality and cost-effectiveness of health care in New Jersey. These reports are an important first step in understanding and addressing the health care affordability issues that affect individuals and families across the state and the nation. The reports demonstrate that lack of affordable health care continues to burden New Jerseyans and will help support the development of innovative and collaborative approaches to address high health care costs.
These reports come on the heels of recently enacted legislation that protects consumers from harmful medical costs and lays the groundwork for Governor Murphy’s important affordable health care efforts. This includes record enrollment in quality, affordable health insurance through Get Covered New Jersey, enhanced Medicaid benefits, a groundbreaking package of bills aimed at prescription drug affordability and transparency, and enhanced prescription drug assistance for low-income seniors, providing economic relief to New Jersey residents and providing a strong foundation for long-term solutions that expand access to affordable health care.
“New Jersey has taken important steps to address the rising cost of health care, but these reports underscore the urgency of continuing our work to ensure quality health care is affordable for all,” said Governor Phil Murphy . “It’s time to intensify our efforts to reform our health care system so that all New Jerseyans can have the best possible health care at a price they can afford.”
Commissioned by the New Jersey Healthcare Affordability, Accountability and Transparency (HART) Program, a joint initiative of the Governor’s Office of Healthcare Affordability and Transparency (OHCAT) and the Department of Banking and Insurance (DOBI), the reports mark an important milestone in advancing the state’s long-term strategy to mitigate the unsustainable rate of growth in health care costs. Most importantly, these reports will increase transparency in health care spending and ensure all New Jersey residents are on the same page about the rapid growth in health care costs and the drivers of those costs.
“We all feel the financial strain of inflation and the rising costs of everyday life. These reports mark an important milestone in our efforts to make quality health care more affordable and accessible for everyone in our state and set the stage for more work to come,” said OHCAT Director Shabnam Salih. “With this information, advocates, policymakers and health care industry leaders can make evidence-based decisions about how to deliver even greater value and cost savings to New Jersey residents and businesses.”
The three reports released today are:
The first annual Cost Growth Benchmark Report: 2018-2019 is based on comprehensive total expenditure data submitted by health insurers doing business in New Jersey. According to the report, statewide health expenditures increased 4.5% between 2018 and 2019, from $10,061 to $10,509 per capita. Health expenditure growth rates varied by market, with the highest growth rates in the private insurance market (8.7%), followed by Medicaid (4.4%) and Medicare (0.2%). This is the first annual cost growth benchmark report for the HART Program and provides insight into year-over-year changes in total health expenditures in New Jersey over the past year prior to the COVID-19 public health emergency. Following the first program year, future reports will compare annual health expenditures to New Jersey’s health expenditure growth benchmarks, which are targeted to contain spending growth. Healthcare Cost Trends for Privately Insured New Jersey Residents, 2016-2021 is based on detailed claims data obtained through the Healthcare Cost Research Institute for approximately 25% of New Jersey residents with employer-sponsored insurance. Findings show that rising health care costs are driving increased private sector spending, not increased utilization of services. The report shows that per capita spending in New Jersey is growing faster than the national average, with the gap widening from 12% in 2016 to 15% in 2021. The New Jersey Healthcare Environment: Select Indicators of Quality, Access, and Affordability summarizes New Jersey’s performance on a select set of indicators of quality, access, and affordability obtained from secondary sources. The report shows that health care affordability has worsened overall, driven by increased out-of-pocket and health insurance premium spending, while quality and access have remained stable or improved compared to the previous year. The only exception is primary care, where utilization has decreased. The report highlights health disparities among New Jerseyans, with low-income residents bearing the highest health care costs. White residents performed worst on measures of ability to afford health care. Hispanic and Latino residents performed worst in terms of access to health care, and Black residents experienced the poorest health outcomes. Counties that performed better than the state average on quality measures were more likely to be in Northern or Central New Jersey, while counties that performed worse on these measures were more likely to be in Southern New Jersey.
Additionally, pursuant to Executive Order No. 217, the Department of Banking and Insurance prepared a report on health insurance solvency standards and posted it on the department’s website.
“The report released today will increase transparency about costs, improve understanding of New Jersey’s health care environment and advance strategies to reduce cost growth over the long term,” said Acting Commissioner of the Department of Banking and Insurance Justin Zimmerman. “New Jersey is committed to increasing access to quality, affordable health care. While great strides have been made, including the establishment of Get Covered New Jersey, the state’s official health insurance marketplace, state subsidies to make plans more affordable, caps on certain prescription drugs and implementing out-of-network reforms, it’s clear that much work remains to connect residents to care they can afford.”
By facilitating reporting of health care costs in the state and using data to understand the causes of rising health care costs, these reports will inform government-wide strategies to maintain or improve quality of care while reducing health care cost increases and reflect the Governor’s commitment to implementing long-term solutions that will benefit future generations.
Across New Jersey, hospitals, health care providers, insurers, employers, consumer groups, labor unions and policy organizations are demonstrating their commitment to working together to make health care more affordable by signing compacts to meet state-set benchmarks on health care cost growth. The benchmarks serve as statewide targets for how much health care costs should increase each year to achieve affordable health care, aligning with projected wage increases and the rise of the state’s economy.
