Trenton lawmakers have acted before to curb soaring hospital and health care costs, to no avail. A new bill attempts to add teeth to those efforts. (Photo by New Jersey Monitor)
Hospitals and health care entities would have to publicly report their prices and limit price hikes to benchmarks set by the state under new legislation that’s meant to contain soaring medical costs.
Federal law already requires such transparency, but only three of 32 hospitals in New Jersey comply, a patient advocacy group found last year.
Under legislation state lawmakers introduced last month, hospitals and health care entities that ignore transparency requirements and yearly cost caps would have to follow a corrective action plan — or face civil penalties of $10 a day per bed and be barred from collecting medical debt from patients.
Bill sponsor Assemblywoman Verlina Reynolds-Jackson (D-Mercer) said transparency on this issue that is required at the federal level is not being enforced at the state level.
“This hospital affordability piece is the No. 1 thing that’s affecting the health care costs that are rising out of control,” she said.
The legislation comes as medical costs grow faster than both incomes and inflation in New Jersey. Rising costs contribute to crippling medical debt and even drive patients to forgo care rather than be burdened by bills they cannot afford, Reynolds-Jackson said. About a half million New Jersey residents, on average, report having medical debt in a given year, according to a 2024 study from KFF, a nonprofit health research group.
Requiring hospitals to report pricing and expenditure data will help policymakers identify and address the root causes of health care cost increases, Reynolds-Jackson added.
“Let’s be clear, at the end of the day, these CEOs are still receiving large bonuses,” she said. “We need to have guidelines and make sure that they’re held accountable.”
State lawmakers for years have sought to address runaway medical costs.
Gov. Phil Murphy created a health care affordability and transparency office in 2020 to study cost drivers, set cost-growth benchmarks, and advance policymaking. He followed that up in 2021 with an executive order setting similar goals. But those measures were a voluntary compact with no enforcement mechanisms.
Assemblyman Bob Auth (R-Bergen) is the most recent prime sponsor of a bill Republicans have introduced every session since 2016 to increase health care transparency and curb costs, but it has gotten no traction in the Democrat-controlled Legislature. Reynolds-Jackson’s current bill replaces and expands upon an earlier iteration she and Sen. Joe Vitale (D-Middlesex) introduced in September. The newer bill, which awaits a hearing before the Assembly Financial Institutions and Insurance Committee, does not yet have a Senate companion.
Under Reynolds-Jackson’s current bill, the state would create a commission focused on health care cost containment and price transparency, codify the existing health care affordability and transparency office, and task both with working together to establish regulations and ensure compliance. The bill allocates $5 million to carry out its requirements.
Advocates also have mobilized on the issue, with labor unions, health care providers, and social justice advocates joining forces in 2022 to create the New Jersey Coalition for Affordable Hospitals. That group has lobbied legislators to support the bill and rallied outside the Statehouse in Trenton.
Kevin Lyons is a member of the coalition, the New Jersey State Policemen’s Benevolent Association, and the New Jersey State Health Benefits Plan Design Committee.
Hospitals should not be revenue drivers, he said.
“Hospitals, by their charter, are created for the public good. We have to remember that, and we have to hold them to account, and this bill will do that,” Lyons said.
Secret, ever-shifting prices are something consumers wouldn’t tolerate in other industries, he added.
“All we’re asking for in this whole movement is to know what we’re paying. When was the last time you went to the supermarket, took a bag of groceries home, and said, ‘Mail me the bill’? When was the last time you bought a car and said, ‘Mail me the bill’? I want to know what I’m paying for before the service comes out,” Lyons said.
Reynolds-Jackson said legislative leaders, who control which bills move in Trenton, have not indicated why the legislation hasn’t yet come up for a hearing.
But the hospital industry is a big spender when it comes to lobbying lawmakers. The New Jersey Hospital Association spent about $358,000 on lobbying last year, according to its most recent annual lobbying report.
In a statement sent to the New Jersey Monitor, Cathy Bennett, the association’s president and CEO, did not specify any stance her group has on the bill — but did blame insurers for rising costs.
“Hospitals are doing our part. Despite facing the same inflationary increases as every other industry, health care inflation was 1.9% lower than the Consumer Price Index through August 2024,” Bennett said. “It is critical that we join together to focus on the drivers of rising health care costs. Health insurance bureaucracy is delaying necessary care and driving up costs.”
Whatever their cause, soaring costs typically get passed on to patients through rising premiums, even though patients receive the same level of care, according to a 2022 report by New Jersey Policy Perspective, a progressive think tank.
The State Health Benefits Commission jacked up premiums by about 20% for state, county, and local government workers in 2022, partly because of hospital overcharging, which cost the state $1.2 billion from 2016 to 2018, the group found.
More broadly, premiums for New Jersey residents grew almost twice as fast as incomes from 2000 to 2022, according to a June report by the state’s health care affordability and transparency office.
Reynolds-Jackson’s legislation has the backing of two city mayors — Camden’s Victor Carstarphen and Newark’s Ras Baraka, who is one of six Democrats now running for governor. The two discussed the bill at the Statehouse last month.
Skyrocketing premiums drove both cities to leave the state’s health benefits program in 2022.
“We moved to the state health benefits plan under the assumption that if you joined a larger network with more people in it, that somehow it would drive your cost down. The argument was, we had an unhealthy population, older population, and if we got into a larger group, it would help us with that,” Baraka said. “But that was all not true. So our utilization was not increasing, but our cost was.”
Baraka estimated Newark, the state’s largest city, saved almost $30 million by switching plans, while Carstarphen put Camden’s savings at $700,000.
But both mayors said they remain concerned about relentlessly rising health care costs, the inconsistency of prices from provider to provider, and the “profit motive” of insurance brokers who collect commissions from both insurers and the municipalities that contract with them.
Ali Jawetz is a member of the New Jersey Coalition for Affordable Hospitals and policy manager at 32BJ Health Funds, which provides health coverage for SEIU union members. If New Jersey acts on Reynolds-Jackson’s bill, she said, it would join other states that have cost-growth benchmarks in place, including Delaware, Rhode Island, Massachusetts, California, and Oregon.
“We are really hoping to focus on price, not utilization. We know that the problem is not that people are using more and more health care, but that these prices are just going up,” she said. “These increases, year after year, cannot come on the backs of workers.”
GET THE MORNING HEADLINES.