State Introduces Benchmark Program to Curtail Healthcare Costs

By Anthony Birritteri, Editor-in-Chief On Dec 21, 2021

With the goal of curtailing the large annual rise in healthcare costs that have been plaguing residents, businesses and the state for decades, Gov. Phil Murphy announced the launch of the New Jersey Health Cost Growth Benchmark Program.

Created through Executive Order 277, Murphy said the program is “based on the firm belief that healthcare spending should not, and must not, rise faster than the economy or residents’ pocketbooks.”

Starting on Jan. 1, the New Jersey Department of Banking and Insurance (DOBI) will work with major healthcare insurance carriers to collect data in order to measure the growth rate of healthcare costs at the state, market, insurer, and large provider entity levels.

According to DOBI Commissioner Marlene Caride, 2022 will be a transition year for the program in which data collection and reporting of healthcare cost information will occur.  After that, yearly benchmarks will be set with targets for the rate of cost increases. They are:

2023: 3.5%

2024: 3.2%

2025: 3.0%

2026: 2.8%

2027: 2.8%

“Through this program, we can build robust data collection and infrastructure that will help us measure our performance, analyze the underlying drivers of cost growth, and identify promising policies and strategies to ensure we reach our goals,” Murphy said.

Additionally, it was announced today that various stakeholders in the healthcare field, including providers, insurers, employers, laborers and advocacy groups, have signed a compact in support of the benchmark program and the goal of working together to provide more affordable healthcare for all New Jerseyans.

The stakeholders include:

• AmeriHealth New Jersey
• Atlantic Health System
• Camden Coalition of Healthcare Providers
• Cooper University Health Care
• Hackensack Meridian Health
• Horizon Blue Cross / Blue Shield of New Jersey
• New Jersey Association of Health Plans
• New Jersey Citizen Action
• New Jersey Health Care Quality Institute
• New Jersey Hospital Association
• NJM Insurance Group
• Rutgers University AAUP-AFT
• RWJ Barnabas Health
• Sandkamp Woodworks
• St. Joseph’s Health
• Summit Health
• Virtua Health

“This group has signed a stakeholder compact signifying their commitment to reach the objectives outlined today and ensuring that healthcare in New Jersey is more accessible and affordable,” Murphy said.

Cathy Bennett, president and CEO of the New Jersey Hospital Association, said she “welcomes and applauds Gov. Murphy’s leadership in bringing together a wide group of healthcare leaders to ensure that the state is a national model for healthcare affordability, quality, and innovation.”

“New Jersey hospitals believe that nothing, particularly costs, should ever be a barrier for our residents to get the healthcare services they need.  Today’s announcement ensures that, together, we will identify the best practices and measures of success for care that are affordable, accessible and exceptional because New Jerseyans deserve no less,” Bennett said.

According to Ward Sanders, president of the New Jersey Association of Health Plans, “Bringing together the many stakeholders in healthcare for an honest conversation on spending and costs is not easy. So, getting us all to agree on something like this compact is pretty extraordinary.”

He said that healthcare spending in the US increased by more than 9.7% last year. “That is neither acceptable or sustainable. … Together is the only way we can truly make progress on healthcare costs,” he commented.

“It takes a willingness to understand the needs of every stakeholder in the system and a commitment by all to make the interests of the patient – health and financial – a priority. It is hard work, but more importantly, it is a more urgent and essential journey than ever before,” Sanders concluded.

“We knew this work was important and we needed to do it for New Jersey. Because of the pandemic, our resolve has only strengthened,” said Shabnam Salih, director of the Governor’s Office of Health Care Affordability and Transparency.

She said there will be significant work ahead with difficult conversations, but innovative solutions.

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