Gov. Phil Murphy’s proposal to establish a new office focused on health care affordability — one of the few meaty policy announcements in his State of the State speech last week — quickly drew praise from doctors, hospitals and other health care leaders.
Murphy praised the health insurance coverage gains seen under the federal Affordable Care Act, but stressed health care costs remained too high, putting insurance — or treatment itself — financially out of reach for some. (On Thursday he signed a package of bills designed to protect the ACA gains.)
“So, I am establishing an Office of Health Care Affordability and Transparency, in the Governor’s Office, to work across state agencies and lead critical efforts to reduce consumer health care costs, make insurance more affordable, and improve price transparency,” the governor said in his annual speech last Tuesday. The process would start with an assessment of current consumer health care costs, he said.
Proceed with caution?
While the Governor’s Office has made few details public — leaving some observers slightly cautious — the rising cost of care has prompted widespread concern among health care stakeholders in New Jersey and nationwide and several stakeholders offered their assistance. According to one analysis, health care spending in New Jersey rose 18% between 2012 and 2016, outpacing the national increase of 15% during that same period.
“The governor’s proposal to establish an office to reduce health care costs statewide is an important first step in controlling health costs. Unaffordable health care costs is the number one problem that consumers face in New Jersey,” said Ray Castro, the health care policy director for New Jersey Policy Perspective, a progressive research organization. State residents with employer-based coverage pay the third-highest premium rates in the nation, he noted.
“However we will need to obtain a lot more information about the office before we will know whether it will tackle the biggest health cost issues facing New Jerseyans,” Castro added.
Some health care experts note that potential models do exist for Murphy’s proposal, both in recent policy recommendations tailored for the Garden State and in programs already in place elsewhere. But truly effective reform requires greater collaboration, detailed payment data and a willingness to consider changes to both state-run insurance programs and those sold in the commercial market, they note.
“We all share a role and responsibility in ensuring that New Jersey residents receive care that is high in quality, accessible when and where it’s needed and is affordable to all,” said Cathy Bennett, president and CEO of the New Jersey Hospital Association, underscoring the need for greater transparency for health care spending. “That’s long been the goal for our healthcare provider community, and it demands a thoughtful, comprehensive conversation for the sake of our residents and our communities.”
Improving cost transparency is also a priority for physicians, according to the Medical Society of New Jersey. “The citizens of New Jersey deserve affordable medical care and should not have to sacrifice quality as work continues on how to best control costs,” said MSNJ president Dr. Marc J. Levine.
Blueprint precedes governor’s plan
The New Jersey Health Care Quality Institute, a multi-stakeholder collaborative dedicated to improving care and efficiency, proposed an entity not unlike the one Murphy recommended in its Medicaid 2.0 Blueprint for the Future, released in early 2017. Medicaid insures nearly 1.8 million residents and now costs more than $15 billion in state (35%) and federal (65%) tax dollars annually. Overall, New Jersey budgets nearly $20 billion a year for various health care costs.
The first of the Blueprint’s two-dozen recommendations is to establish an Office of Health Transformation, with liaisons from more than a half dozen departments — including the Treasury, which oversees health plans for some 800,000 public workers and retirees — to coordinate and better control this spending. It would also identify opportunities to share services and help align quality and performance metrics for various programs, while developing a broader strategy for the future.
“Clearly when you talk about so much money, such a big part of the budget, it makes sense to have a health care master plan,” said Quality Institute president and CEO Linda Schwimmer.
“But to have a master plan you have to have data to make systematic decisions,” she added.
The institute has also advocated for greater public access to Medicaid and other health insurance payment data, to inform public policy decisions.
These policy proposals resurfaced the following year, as part of a report presented to Murphy — who took office in January 2018 — by his health care transition team, a panel that included Schwimmer. It also called for a health care transformation office to work across departments, as well as greater transparency when it came to claims data.
“I think it’s good they’re starting to think in these larger systemic ways,” said Schwimmer, who has continued to discuss these plans with Murphy’s staff. “The proof will be in the pudding, of course.”
In January 2018, state Sen. Joseph Vitale (D-Middlesex) introduced a bill with similar aim: It also would have established a health care transformation office as an independent entity within the Governor’s Office to coordinate spending on Medicaid, public worker insurance and other health care programs. The health care transformation office could consider how to work across government agencies to improve its purchasing power on pharmaceuticals or other services and to plan for the future, according to the legislation, which did not get a hearing in either house.
Too costly, too complicated
“I agree with the Governor, health care is too expensive and health care coverage is far too complex and difficult to navigate,” Vitale said last week, offering to work with Murphy to create the office. “I am confident it will be a much needed resource for our residents and a powerful tool in the fight to make health care clearer and more accessible, affordable and comprehensive in the state.”
Schwimmer and her colleague Matthew D’Oria have also studied initiatives launched in other states, which they said reflect some aspects of what Murphy appears to be considering. Two models include the Massachusetts Health Policy Commission, an independent state agency created in 2012 to monitor spending and provide policy recommendations, and Connecticut’s Office of Health Strategy, which opened in 2018 in an effort to make care more affordable and higher quality.
The Massachusetts Commission was created after an expansion in insurance coverage — prompted by the 2006 state law seen as a predecessor to the ACA — improved access, but also drove up taxpayer costs significantly. It is led by an 11-member board made up of members with a wide range of health care expertise, appointed by state leaders, and seeks to keep health costs spending in line with other state spending. It also incorporated standards dedicated to better meeting “patient’s medical, behavioral and social needs.”
Connecticut’s office was the product of similar concerns, albeit years later, according to its website; it consolidated several existing programs under one roof. It also depends heavily on extensive claims data the state has collected, which allowed the office to launch an innovative online tool that enables the public to review providers and get cost estimates for various procedures.