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New study shows health care spending up 18% in NJ

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The Health Care Cost Institute study found health care spending in New Jersey climbed 18 percent.
The Health Care Cost Institute study found health care spending in New Jersey climbed 18 percent. - ()

If you had any doubt about whether or not health care spending is increasing in the state, here's some sobering statistics to digest.

According to an exclusive analysis of New Jersey health costs from 2012-2016 conducted by the Health Care Cost Institute and commissioned by the New Jersey Health Care Quality Institute, health care spending in the Garden State rose faster than the national average. While spending jumped 15 percent nationally, in New Jersey it climbed 18 percent, or the fifth-highest per capita.

The HCCI data covers employee-sponsored insurance from four leading insurers: UnitedHealth Group, Aetna, Humana and Kaiser Permanente. In New Jersey, the data covers 35 percent of people covered by their employers. HCCI adjusted the data so the sample examined reflects the larger population of all New Jersey residents insured by their employers.

NJHCQI President & CEO Linda Schwimmer said the data from the study show inpatient utilization decreased to a greater extent (19 percent) than the national average (12.9 percent). “Which is good news — except that inpatient spending went up 12 percent overall because inpatient prices went up 38 percent,” she said.

“The rate of increase is happening at a time when the rate of usage of services is going down,” said Schwimmer.

HCCI looked into several specific areas of inpatient care.

They found, for example, that spending per person for surgery in New Jersey jumped 20 percent; labor and delivery was up 17 percent; and newborn care soared 49 percent. Meanwhile, outpatient spending outpaced the rise nationally because there was an increase in both usage and prices.

“The rate of increase is happening at a time when the rate of usage of services is going down.”

- NJHCQI President & CEO Linda Schwimmer

Analysis from the study revealed national outpatient spending rose 17 percent while outpatient spending in New Jersey jumped 19 percent. Lab and pathology increased 31 percent (compared with 14 percent nationally); emergency care rose 32 percent; radiology 18 percent; and outpatient surgery 7 percent.

Prescription drug spending per person also increased; however, it was on par with national numbers.

“But that’s not good news when we’re talking about a 27 percent increase from 2012-2016. In New Jersey, the highest jumps were in drugs for skin conditions, at 93 percent; hormone drugs, at 67 percent; and cancer drugs, at 64 percent,” said Schwimmer.

“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 added.

For Schwimmer, a key takeaway is reducing avoidable utilization alone will not solve the problem of escalating spending. The data, she said, show the main driver in rising employer sponsored health care spending has been the jump in prices.

“We now spend 17.9 percent of our gross domestic product on health care — twice what we spent in 1980,” she said.

Going forward, Schwimmer said that she would like to see policy and plan design changes enacted, as well as the establishment of a claims database exclusively for New Jersey where information can be input on regular basis so decision-makers can conduct analysis. Such a database does not currently exist in New Jersey.

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Anthony Vecchione

Anthony Vecchione covers health care for NJBIZ. You can contact him at: Avecchione@njbiz.com.

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