The Price Of Health Care Really Is More Expensive In NJ. Here's The Proof.

Hospital admissions in New Jersey declined nearly 20 percent between from 2012 to 2016, a trend that should have made the overall cost of health care cheaper.

But instead, hospital costs rose 12 percent because the price of delivering that care soared by 38 percent, according to information released Thursday by the New Jersey Health Care Quality Institute, a nonprofit research and advocacy organization.

Linda Schwimmer, the institute's president and CEO, released the first-of-its kind information to help shape how employers and state policy makers think about health care spending. 

"We want to see more transparency, so more groups like ours can work to shine a light on trends and improve affordability. It will be essential to getting more people covered and improving quality of life," Schwimmer said. She included the data Thursday's installment of her monthly blog.

Schwimmer asked the Health Care Cost Institute, a non-partisan, nonprofit think tank to delve into the reams of health claims data and compare New Jersey to the nation.

New Jerseyans pay the fifth-highest health care costs, and rising prices are a significant reason why, according to the national institute's analysis.

Based on health care claims by private insurance from 2012 to 2016 the data found:

  • Health care spending rose 15 percent nationally compared to 18 percent in New Jersey. The difference is worth hundreds of millions of dollars, Schwimmer said.
  • Hospital admissions declined 19 percent in the state, but because prices rose 38 percent, inpatient spending grew by nearly 13 percent.
  • Per-person spending rose 49 percent for newborn care, 32 percent for emergency care, 31 percent for laboratory testing, 20 percent for surgeries and 17 percent for labor and delivery.
  • Drug costs rose 27 percent in New Jersey and nationally. In N.J., drugs treating skin conditions rose the most, at 93 percent. Cancer drugs rose 64 percent. "Certainly there are examples of new and costly life-saving and life-changing drugs, but there also are many examples of price hikes in drugs that have existed on the market for many years," she said.

Employers and insurance companies have long encouraged people to go to outpatient surgery centers and testing labs rather than hospitals as a means to reduce costs.

Judging by the data, "you can say we are doing a pretty good job reducing unnecessary utilization, like extra testing and other care that doesn't have a lot of value," Schwimmer said. "But that is not going to be enough."

"It's how high prices are for certain things," she added. The price of care "is growing more rapidly here than the rest of there country."

It's not clear why prices are rising so fast in the Garden State. Sure, New Jersey is an expensive place to live, but that was true in 2012, the first year the data was collected, Schwimmer said.

We also have an increasing number of people turning 65 but the analysis uses claims data from private insurers like Aetna and UnitedHealthcare, not the government-run Medicare program, she said.

Studies have shown hospital consolidations generally drive up the cost of health care, as hospitals wield greater negotiating power with insurers and employers. There are 72 hospitals in New Jersey and all but a dozen are part of a larger system or chain. Schwimmer said she didn't know if the merger mania over the last decade contribute to pricing increases. "But it's a fair question to ask," she said.

Ideally, the Murphy administration and the state Legislature would create New Jersey's own health care claim database to analyze expenses, Schwimmer said. Ohio, Massachusetts and Montana have done so, she added.

An earlier version of a bill Gov. Phil Murphy signed into law in the spring, aimed at ending surprise medical bills from out-of-network doctors and hospitals, would have created the data base. That provision was eliminated. 

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