In an effort to curtail rising healthcare costs in New Jersey, Gov. Phil Murphy has launched a new initiative that would limit how much healthcare spending can grow annually.
Under an executive order signed Dec. 21, the governor authorized the creation of a Health Care Cost Growth Benchmark Program, which aims to keep New Jersey’s healthcare costs in check with inflation and wages.
The governor stated that “the COVID-19 pandemic underscores just how important it is that New Jersey continues to work to lower the cost of healthcare for residents and we recognize that affordable, quality healthcare is a critical part of our COVID-19 recovery.”
“Making New Jersey a more affordable place to call home for our residents and businesses means working to address the cost of high healthcare prices,” added Murphy.
Starting Jan. 1. 2022, the New Jersey Department of Banking and Insurance (DOBI) and the Governor’s Office of Healthcare Affordability and Transparency will work with major insurance carriers to gather data on healthcare costs, including insurance payments and out-of-pocket costs, for everyone covered by Medicaid, Medicare or private insurance.
The six-year program describes 2022 as a “transition” year, in which information is collected and reviewed.
According to the administration, benchmarks will then be identified for subsequent years, with the rate of cost increases not to exceed 3.5% in 2023, 3.2% in 2024, 3.0% in 2025 and 2.8% in 2026.
Besides slowing the rate of growth “to make healthcare more affordable and sustainable for families, individuals, employers and the state,” the program will “promote increased transparency and accountability for healthcare spending,” DOBI commissioner Marlene Caride said.
Governor’s Office of Health Care Affordability and Transparency director Shabnam Salih said, “New Jerseyans deserve the piece of mind of quality and accessible healthcare and we know that access often begins with being able to afford the care you need without sacrificing other critical needs.”
For decades, the cost of care has grown faster than the economy and continues to rise, Murphy noted. From 2010 to 2016 in New Jersey, healthcare premiums and deductibles have grown roughly three times faster than residents’ incomes and in 2016, premiums equaled almost a third of median household income.
As of May 2020, more than 75% of New Jersey adults surveyed said they were worried about affording healthcare in the future, according to a survey cited by the administration.
In response to the economic hardship on residents and businesses due to the pandemic, in January Murphy directed the development of a healthcare cost growth benchmark program to mitigate the rate of healthcare cost growth in the Garden State.
Besides issuing an executive order to formally establish the program, Murphy announced a stakeholder compact signed by advocacy groups, hospitals, insurers and healthcare providers who are committed to meet the benchmarks.
Stakeholders Vow To Work Together
It “establishes a commitment to take actions to make healthcare more affordable and to participate in the data collection, validation, analysis and reporting processes,” the governor said.
Signatories include the chief executive officers of Horizon Blue Cross Blue Shield of New Jersey and AmeriHealth, as well as the New Jersey Association of Health Plans. Leaders of RWJBarnabas Health, Summit Health, Hackensack Meridian Health, Atlantic Health System, Virtua Health and St. Joseph’s Health, along with the New Jersey Hospital Association, also signed the compact.
In a statement, New Jersey Citizen Action Health Care program director Maura Collinsgru, said, “This important project will shed light on what is driving New Jersey healthcare costs higher and enable us to craft solutions to address the problem at its source. Controlling costs while not diminishing access is critical if we are to achieve our shared goal of universal health care for all New Jerseyans.”