The High Cost of Public Healthcare in New Jersey

By Beth Fitzgerald

New Jersey public healthcare spending was among the highest in the nation in 2009 - $11,903 per capita for Medicare and $10,825 for Medicaid. That's 15 percent higher than the Medicare national average, and 60 percent higher than Medicaid's $6,826. And while New Jersey's total healthcare spending was not as high - $7,583 per person, compared with a national average of $6,815 - it was still in the top 20 percent in the nation.

Those figures are from a national report released by the federal Centers for Medicare and Medicaid Services in Washington, D.C., which said the costs reflect the state's older population, higher per capita income, and higher cost of living - all of which drive up the cost of everything, including healthcare.

Joel Cantor, director of the Rutgers Center for State Health Policy elaborated on this point. "Our spending per enrollee is very high," Cantor said, because "our program covers very sick people, more so than the national average. It is not because we pay providers more than average. We don't." Compared to the rest of the country, Medicaid in New Jersey has "a bigger share of spending for the elderly and people with disabilities. They are very high consumers of healthcare because they are very ill and they use long-term services and a lot of acute medical services as well."

The highest-spending state at $9,278 per capita was Massachusetts, which requires its residents to get coverage and provides a state-sponsored system of health plans. Massachusetts' program is very similar to the national health care exchanges where all Americans will be able to shop for coverage in 2014 under the Affordable Care Act.

Nicole Brossoie, spokesperson for the state Department of Human Services (DHS), which runs the Medicaid program, said the CMS report "supports the efforts New Jersey is pursuing to preserve the Medicaid program through reform measures." The state is seeking a federal Medicaid waiver that will extend managed care to nursing home patients, and encourage them to get care at home rather than at a medical facility.

It is not unusual for New Jerseyans who need nursing home care to spend down their assets to qualify for Medicaid, which then covers their care. Among the goals of the state's Medicaid waiver is to shift more resources into home health care and reduce the number of elderly in long-term nursing facilities.

In the current fiscal year, managed care enrollment became mandatory for nearly all Medicaid enrollees. In 2009, the year covered by the CMS study, only 75 percent of New Jersey's Medicaid customers were in managed care; this past October 1 that rose to 92 percent. DHS estimated that managed care will save $36.4 million this year. "More importantly, managed care has been shown to effectively and positively impact patients' health-related decisions, eliminate duplicative services, and improve health outcomes," Brossoie said.

DHS is looking for more changes to Medicaid, a 50/50 state and federal program that spends about $11 billion a year. DHS is awaiting CMS review of its Medicaid waiver, which proposes moving nursing home and other long-term care patients into managed care, integrating behavioral health with physical healthcare, and pioneering Medicaid Accountable Care Organizations in cities like Camden, Newark, and Trenton in an effort to improve the health of low-income residents while also reducing their reliance on hospital emergency rooms.

Cantor noted that U.S. healthcare spending is the highest in the world, and New Jersey was above the U.S. average in 2009. In addition, the healthcare costs paid by employers rank New Jersey in the top five nationally. "We are high spenders in the highest-spending country in the world."

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