Political analysts and labor leaders are calling on state lawmakers to rein in escalating hospital prices following recent double-digit increases in insurance premiums for state employees.
State insurance programs could pay hospitals more than $1.2 billion a year above the actual cost of care for those insured through state insurance programs for employees government and school workers, according to a report released Wednesday by New Jersey Policy Perspective, a liberal think tank.
By “controlling high hospital prices, state legislators can make health care more affordable for patients, public employees, and state and local governments,” wrote Brittany Holom-Trundy, senior policy analyst for New Jersey. Policy Perspective.
The report was released at the League of Municipalities’ annual meeting in Atlantic City, as four of the state’s largest unions, along with New Jersey Citizen Action, a consumer advocacy group, and the political group announced the formation of the “Coalition for Affordable Hospitals”.
State legislators should explore “ways to contain hospital pricing-induced costs, such as price caps and referral-based pricing,” the New Jersey Policy Perspective report said. Benchmark pricing ties the price of hospital care to a standard, such as the rate paid by the federal Medicare program.
New Jersey hospitals are currently paid 2.3 times the Medicare rate, on average, and 1.5 times the “commercial break-even rate” for care of people insured by state programs, the report said. .
The call for price controls is the latest salvo in a debate that began in July when bonus hikes for public employees became public knowledge. Members insured by local and county governments and schools face the largest increases – more than 20% in some cases. Mayors and county officials said the unexpected spikes would shatter their budgets.
Joining the coalition announced Wednesday are the Communications Workers of America, the New Jersey Education Association, the New Jersey Police Benevolence Association and 32BJ SEIU.
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Nearly 54,000 fewer people are enrolled in state health benefit programs for public employees – the State Health Benefit Program (SHBP) and the School Employee Health Benefit Program (SEHBP) ) — than there were in 2015, Holum-Trundy wrote. But costs have increased by about $417 million.
“Hospital prices account for a significant portion of rising insurance costs,” the report says, and there is “little standardization of hospital prices paid by insurance schemes.”
Lawmakers should “better regulate and reduce high hospital prices,” she wrote, as this would allow public employees as well as taxpayers to fund SHBP and SEHBP.
“To put New Jersey on the path to a fairer future, the state cannot simply stick to one-time fixes like band-aids and continue to raise the cost of bonuses for public employees and state governments. States and locals,” the report said.
In recent months, Republican lawmakers have accused the treasurer of lying during legislative testimony and called for subpoenas to seek more information about the health insurance rate hike.
They argue the Murphy administration knew more about the big increases than Treasurer Elizabeth Maher Muoio let on during budget hearings earlier this year. But Muoio hit back in a letter to Republican Senate leaders that “any assertion about a lack of transparency is patently wrong” because this year, as in previous years, the Legislative Assembly received thousands of pages of documents related to the budget.
Typically, members of the state plan design committee discuss and design what is covered and how, and then approve the plan. The State Health Benefits Commission is responsible by law for setting the premiums for the plans in the program each year.
These rate increases were not made public until July, when the rate renewal report was released as the commission prepared to vote. Local and county labor organizations continue to push back on rate hikes. The plan covers more than 816,000 public employees statewide, active and retired.
Five state government employee unions have reached agreements with Murphy’s administration that require them to pay only 3% more – with taxpayers covering an 18% hike. The same agreement was not reached for local and county employees in the plan.
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