More Accessible, More Affordable Health Care for New Jersey

Plan for Accessible and Affordable Health Care

Thank you for joining me here today at this great institution of excellence, which has been nationally recognized for its efforts to improve patient care and reduce costs.  Virtua and the Virtua System represent the best in American health care.

I want to particularly Richard Miller, the President and CEO of Virtua Health, for his kind words, and for his effective leadership of this institution.

I’d also like to thank Ken Thorpe, Professor and Chair of the Department of Healthy Policy and Management at the Rollins School of Public Health of Emory University, and experts at the Center for State Health Care Policy at Rutgers, a number of hospital administrators, consumer and public policy advocates, as well as my staff, for all their hard work in preparing the policy proposals.

Before I begin, let me say I acknowledge that it is going to be a long presentation, but tough problems don’t lend themselves to short speeches or sound bites.  And if you want to fix a problem, you have to recognize it and all of its complexities.

Now – five months ago I became a candidate for Governor.  I said that I was running to build a better life for everyone in New Jersey.

I said I wanted this campaign to be about us, not about me; about the people of New Jersey, not about insiders; about progressive ideas, not divisive politics

And I pledged that over the course of this campaign I would offer positive ideas on the challenges and opportunities facing this state.

Today’s address is about one of New Jersey’s greatest challenges: affordable health care.  This is the third in a series of broad-based policy proposals — and, I’ll remind you that all of my policy speeches are posted on my web site,

In February, I outlined a comprehensive ethics reform proposal to root out pay to play at every level of government. I made clear that I will be an independent Governor who will make decisions on their merits — not to satisfy entrenched interests, or gain their contributions or their favors.

In March, I provided a detailed action plan to replace the old politics of tax, borrow and spend with a new strategy of invest, grow and prosper.  I focused on critical investments to stimulate economic growth through the Edison Innovation Fund, a Ports Initiative for Good Wages, and expanding New Jersey tourism.

And I emphasized this strategy is not just about bricks and mortar, but about the most important asset of all human capital.  We must invest not only in creating jobs, but in building careers.  And we must make New Jersey one of the best places to live, to raise children, to go to school, to work, to start a business, and to grow old with dignity.

And, in June, I will outline my plan to improve the quality of life for the senior citizens.

But today, I want to focus on our health care system a system that should be an accessible and affordable reality for every family in our state.

Recognizing whether it’s health care, property taxes, education or gas prices, the central focus of the next Governor should be to make living in New Jersey more affordable.

When your child or your parent is sick, the last thing you want to worry about is whether you can afford the doctor’s visit, the medication, or the operation your loved one needs but unfortunately, too many people in New Jersey live with that worry every day.

This is a case where social justice is also an economic imperative:  While leaving the broken health care system the way it is has an enormous human cost, it also stands in the way of our state’s ability to invest, grow and prosper.  Businesses need to be able to afford health care benefits for employees and need a healthy, productive workforce.  As a businessman, I know that solving this health care challenge requires new thinking.  I understand that through small investments and by redirecting resources, we can make New Jersey’s health care system more accessible, and more affordable.  We can do the right thing, and we can do it without large additional expenses.

According to the most recent statistics, New Jersey has the highest medical insurance costs in the nation.

This makes it hard for families but it also makes it harder to attract capital, to grow companies and gain high-paying jobs.

According to the most recent survey, New Jersey family premiums are 11 percent higher than the national average. To make matters worse, we are paying much more than our neighboring states.

As a result, the average premium for New Jersey families is more than $13,000 a year — which is nearly $1,700 dollars more than our Pennsylvania neighbors pay and $1,000 dollars more than in New York.

Past investments in the state’s health system have yielded enormous dividends. Three decades ago, our people drove to New York and Philadelphia for cancer treatment.

Today, New Jersey is home to great medical institutions, with health dollars reinvested in our economy and with quality care provided near our homes and families.  For instance, the Cancer Institute of New Jersey in New Brunswick, is one of just 39 hospitals that the National Cancer Institutes designates as a comprehensive cancer center the nation’s highest, most prestigious recognition.

That said, there is a crisis in health care that confronts not just our state, but every state, every business, and the entire nation: it is not just a moral issue, but also an increasingly critical economic issue as costs spiral out of control.

When I was the Chairman of Goldman Sachs, it was rated one of the 10 best places to work in America.  We respected our employees, we expected excellence, and we rewarded it.  And we believed in the basic principle that health coverage was right for our workforce and good for our business. In the 2000 Senate campaign and in the U.S. Senate, I’ve fought to expand coverage — yes, universal coverage — and to get costs under control.  But today, the Republican leadership in Washington has blocked national health care reform, and actually made things objectively worse.

Recently I led a bipartisan fight against President Bush’s 15 billion dollar cut in Medicaid. We stopped 5 billion of that cut, but President Bush got 10 billion of his cuts which for New Jersey, will slash 240 million dollars over five years, and could deny health care for almost 100,000 New Jersey children.

In Washington, the challenge is to limit the damage do no harm.  In New Jersey, it is to move forward.

The arena for real health reform has shifted to the states, to local government, and to businesses like General Motors — which are now seeing their credit rating downgraded primarily because of the exploding costs of health coverage.

So, I have come here to this state-of-the-art health facility to focus on what we can and must do, in New Jersey, about the urgent issues of coverage and cost.  Let me set the marker down.  Let me establish a real goal, a real agenda.

Taken together, the policies I propose will, in the four years of the next Governor’s term, make access to affordable health care available to 95 percent of New Jersey citizens, and cut costs for families 10 percent below what they otherwise would be.

These goals are aggressive and I know people in this room and my friends in the media will hold me accountable to them if I am elected.

I welcome the challenge and look forward to partnering with New Jersey’s outstanding health care industry, business and labor leaders and consumer advocates to make it a reality. It will be a team effort an effort that will position New Jersey to lead, grow and prosper.

We cannot wait for Washington or others to respond.  We must take the responsibility, and we must act.  First, we need to ensure that children, families and pregnant women in need have access to health care.

It is unacceptable that despite New Jersey’s wealth, not only are 264,000 children uninsured, but 200,000 who qualify for FamilyCare or Medicaid remain uninsured.

Many have suggested reasons why 200,000 children who qualify for FamilyCare and Medicaid are not enrolled like the state isn’t spending enough money on outreach and assistance, or that parents are less likely to enroll their children if they themselves cannot enroll.

These are real issues, but the situation is unacceptable and we have to change it.  In Virginia, Governor Mark Warner made full enrollment a priority and he’s made dramatic progress.  We will too.

The time is now to provide universal access to health care for ALL New Jersey children and pregnant women.

In addition, we need to provide access for parents whose children qualify for FamilyCare.
Under my plan, every enrollee will pay an affordable premium based on their income.  At most, it will be approximately half the cost they’d pay to buy health care on their own.

And here is what this means for New Jersey’s working families:

? For families of four, with incomes up to $68,000, all children will continue to be eligible for FamilyCare. As Governor, I will launch an aggressive outreach campaign to enroll all those children.

? Families of four with incomes above that level can buy-in to cover their children.  They will pay about 130 dollars per month, no matter the number of children in the family.  That’s approximately half of what they’d pay to buy health coverage for their children in the individual marketplace.

? All pregnant women will be able to enroll in FamilyCare. Premiums will depend upon their income. In the Senate, I championed covering pregnant women and their children with the “Start Healthy, Stay Healthy” initiative and I look forward to making it a reality here in New Jersey.

? All parents of children who qualify for FamilyCare will be able to “buy-in” and cover themselves at half the cost they’d face if they bought health coverage in the individual marketplace.

And we’re going to put the “family” back in FamilyCare by offering, for the first time, family packages for adults and children that will bring costs down even more.

Senators Joe Vitale and Tom Kean Jr., Assemblywoman Loretta Weinberg and Assemblymen Neil Cohen, Herb Conaway and Bob Morgan have worked hard to advance this bipartisan agenda over the last several years, and I will work with them as Governor to get the job done.

This doesn’t just affect the families who sign up.  The fact is, every taxpayer, and business across New Jersey, is paying for health care for the uninsured.

Taxpayers are now shelling out 582 million dollars a year to compensate hospitals for those who don’t have coverage “charity care.”  Over and above this, New Jersey residents and businesses face a hidden “premium” tax of 7 percent on their private insurance to pay for uncompensated care.  In effect, the people of New Jersey are paying for the 1.2 million New Jerseyans who do not have health insurance.

Everybody knows it, and it’s time to do something about it.

Further, most insurance companies currently drop dependants at age 19. As most families realize, many young adults cannot afford the high rates in the individual market and parents are left to worry about their adult children getting sick, leaving them footing the bill. So, another initiative I will put in place will require insurance companies to allow parents to buy coverage for their adult children up to age 30.   Nearly a third of the uninsured are in this 19-to-30 age group.

This is an issue where Senator Nia Gill and Assemblyman Neil Cohen have led the way.  Together, we’ll get the job done.

We also know the system requires a safety net.   I am proud of the work I’ve done in the United States Senate to bring more funding for community health centers in low-income, high-need areas.  Just recently a clinic in Lakewood, New Jersey was approved.

Last year, 20 federally-qualified centers served over 289,000 families in New Jersey.  For all of their great work in diagnostic and preventive care, they must be attuned to the economic and cultural realities of the communities they serve. They have limited hours and stretched resources.  In short, we need more of them with community-sensitive policies.

In addition, we will launch cooperative efforts with our community hospitals to provide community health services.

The partnering of community health clinics with a local hospital as executed by AtlantiCare in Atlantic City has enormous benefits for controlling costs and providing care.  Working with our community hospitals, we will greatly incentivize these partnerships, getting people out of the emergency rooms and into clinics for primary care.

Now, expanding access is only part of the solution. We also need to make health care more affordable for those who already have insurance.

Most New Jersey citizens get their health care from their employers.

There are many reasons why health care costs for these citizens and their employers continue to skyrocket:  costly medical errors, duplicative tests, unnecessary paperwork, health insurance fraud, poor preventive care, prescription drug costs and chronic illness.  And we may even be over-regulating the health care market.

In the absence of universal health coverage, we must address each of these issues incrementally, and if we do, we can lower average costs for New Jersey families and businesses ten percent below what they otherwise would be.

First, we can and we will tackle costly errors, duplicative tests and unnecessary paperwork.

More than one of every four dollars spent on health care in New Jersey doesn’t pay for doctors or treatment — it pays for administrative costs.  That totals 15 billion dollars a year.

The Medicare program has shown that we can keep administrative costs as low as 2 percent.  Meanwhile, private HMOs administrative costs approach 20 percent. When the government is beating HMOs by 18 percent, we know something is wrong.  In short, we need to rein in the costs of health care middlemen.

The Center for Information Technology estimates that approximately 20 percent of medical tests are ordered a second time simply because previous results get lost and can’t be found.

I could go on with other examples, but suffice it to say that billions of dollars are spent every year that simply have nothing to do with the delivery of care — in fact, one could argue that these layers of bureaucracy and inefficiencies harm care.

Just as we want our education dollars to go the classroom and not the bureaucracy, we must and will see to it that health care dollars stay in the doctor’s office and don’t slip away to HMOs and insurance companies.  By using modern technology to process medical claims, my New Jersey Health Care Technology Initiative will improve care and reduce insurance costs by approximately 100 dollars per year/per person. By the end of the term of the next Governor, insurance companies who do business with the state will handle all claims, referrals and other paperwork electronically. The Veterans Administration does it, and we can do it.

Next, we must — and we will — expose and reduce a second hidden tax all New Jerseyans pay in their health insurance premiums “the fraud tax.”

The National Health Care Anti-Fraud Association estimates that 3% of all health care costs can be attributed to fraud.  That means New Jerseyans pay $1.5 to $2 billion a year for health care fraud.

Other estimates by government and law enforcement agencies place the loss as high as 10 percent a year which means fraud could cost as much as $5 billion to our state.

If I am elected Governor, I will put out an “all points bulletin” on health care fraud.

I will make sure that the state’s anti-fraud programs are the toughest and most comprehensive in the nation, including a hotline that we will actively promote the public’s participation in checking this insidious abuse.

We will also create new incentives for doctors, consumers, and businesses to report fraudulent billing, and we will dedicate all fines and penalties for fraud to expanding access and reducing health costs for New Jersey citizens.

At the same time, we can and we will reduce rising prescription drug costs.

As we address this issue, it is vitally important to remember that our state is often called the “medicine cabinet” and “the Cure Corridor” for the nation.  New Jersey is home to some of the best health care companies and the best R & D in the world.

I am committed to partnership and collaboration with the pharmaceutical and biomedical industry, which are foundations for the state’s economic future.

Here in New Jersey, our fellow citizens have researched and developed path-breaking health innovations, technologies, and medicines. We should be proud of them. Pharmaceutical companies and their employees have revolutionized health care and saved lives.

And my plan to invest, grow and prosper for New Jersey’s economy includes investing with the pharmaceutical and biomedical sector.

But we must also face the reality that this state is in the red and the burden of prescription drugs on state spending is 1.6 billion dollars and growing.  The same programs cost the state 1 billion dollars five years ago.  The state, like the private sector, has experienced double-digit annual increases that are unsustainable in the long term.

To make matters worse, New Jersey has the lowest use of affordable generic drugs in the nation.

My plan to address rising prescription costs is specific and sets me far apart from the Republican candidates.

? We will reduce state and private prescription drug costs by dramatically increasing the use of generic drugs, where medically appropriate.

? Generics can cut costs by 25 to 80 percent, and the savings will make a real difference, not just for the state budget. Given co-pays and the new Medicare Part D plan — our taxpayers can’t afford a 41 percent generic utilization rate in state prescription drug programs when other states have increased the use to 60 percent.

? We will further reduce costs by consolidating the state’s different programs that buy prescription drugs and negotiating the best prices.  For example, Plendil, a high-blood pressure drug, costs uninsured Americans $2.37 per pill, while the Veterans Administration pays only 46 cents.  We need to make sure New Jersey is getting the 46-cent price.

Next, we must also provide better care for people with chronic illness.

Ten percent of New Jerseyans with health insurance today account for 70 percent of total health care spending.

If these chronically ill individuals receive better health care and we prevent repeated hospitalizations, we will reduce average insurance premiums for everyone, by more than 100 dollars per year per person.

Specifically, I propose setting up a pilot program to create common-sense voluntary programs within existing health plans to ensure those with chronic diseases get the right kind of care.

Specific, tested best practices and protocols will be applied to meet individuals’ needs whether you have congestive heart failure, kidney disease, diabetes, or asthma. Each plan will establish clinical performance measures developed by professional societies like the American Diabetes Association and the American Heart Association.

A Rand Corporation study has found that patients get the recommended care only about 55 percent of the time.

Common sense and the best research show that by providing better care, individuals with chronic conditions will be hospitalized less with a corresponding reduction in costs.

We also know that the best health care is to keep people from getting sick in the first place.  Holistic approaches to health care are necessary to that end.  I support dramatic reductions in the air pollution that sends urban kids every summer day into our emergency rooms, and consigns seniors to premature death.

Specifically, I am committed to the passage of the New Jersey Smoke-Free Act to protect the health of all New Jersey citizens, and to the reduction of particulate pollution from diesel emissions, as well as serious enforcement of the Clean Air Act.

To reduce costs, we simply must promote preventive medicine and healthy lifestyles.

Today, many HMOs and insurance companies invest too little in these critical areas.  Why would an HMO seek to prevent heart disease in an 18 or 28 year old when he or she is not likely to have a heart attack until age 50 or 60 and when that same individual is likely to switch their health insurance company five or more times over their lifetime?

This cycle must end for our state to control health care costs.  We must change the incentives.

I will also promote a comprehensive healthy lifestyle program ranging from adopting strong school nutrition standards, to addressing child obesity, to creating school fitness report cards for every child.

Additionally, we urgently need to lower health care costs for small businesses and we will.

Small businesses in New Jersey are a fragile linchpin in the health care system, covering almost one million of our people, but leaving behind hundreds of thousands.

Small businesses like the Armand Corporation, owned and operated by Barbara Armand with 40 employees, want to do the right thing and offer health care to all their employees and their families.

But every day it gets harder to do that. The double-digit inflation in health care premiums is outright unaffordable.

Barbara previously offered her employees family coverage. Last year, as premium increases soared, she was forced to switch to providing only individual coverage.

Barbara and one of her employees, Stewart Balfour, are both here today.

Barbara and Stewart, would you please stand up . . . If I am elected Governor, we will help you and we will help all small businesses do the right thing.

We will offer coverage of catastrophic cases to reduce your health insurance premiums.  And we will provide long-overdue regulatory relief in the small business market.

For instance, we will allow small employers to design their own plans rather than imposing a state-mandated “one-size-fits-all” approach.

I will also explore, with all the appropriate stakeholders at the table, whether New Jersey insurance companies should offer a “mandate-free” or “mandate-lite” insurance product. While all mandates are well-intentioned, their collective impact can price many New Jerseyans out of the health insurance market.

And for small businesses with 25 or fewer employees not currently offering health insurance, our reinsurance plan, called “Healthy NJ,” will reduce premiums by at least 10 percent.  It will again provide incentives for preventive care in insurance coverage. More than 72,000 New Jersey small businesses will be eligible for this program — that’s 98 percent of all small businesses in New Jersey that do not offer health insurance today.

And just like a small business, as Governor, I will be focused on the bottom line.  In light of the state’s poor fiscal condition, we simply must be focused on that bottom line.  And the simple fact is, we can provide health care to hundreds of thousands of fellow citizens, and reduce costs, without increasing the burden on taxpayers.

The proposals I have outlined will be funded with federal dollars, through better management of existing health care expenditures; they will save money by doing more with less, and acting sooner instead of letting individuals’ health problems grow into acute concerns.

The resulting savings literally will total billions of dollars.  So, my health plans require an up-front investment of no more than 15 million state dollars.  The resulting savings would well be literally, billions.

Finally, there’s something else we all need, no matter what coverage we have or lack:  We must make health care safer for patients.  All the rest of our progress will be meaningless if the health care system doesn’t make us healthier.

In one recent survey, New Jersey ranked 43rd in the nation in health care quality.

If I am elected, New Jersey won’t ever be 43rd again.

To deliver better care, our hospitals and doctor’s offices need — and I will make sure they have — the technology that will limit medical errors.  There is no longer an excuse for a patient getting the wrong medicine because the orderly can’t read the doctor’s handwriting.

We also have to increase the number of primary care physicians so our doctors are treating the whole person.

We also need to ensure that doctors and patients not HMOs — make medical decisions.  We have to give doctors and consumers more rights and information to challenge HMOs when they deny care, and stop medical providers from billing consumers with unfair charges.

We can’t ignore the increasing frustration of doctors with HMOs and insurance companies. Medical decisions must be in the hands of doctors and patients not claims processors.

As Governor, I will be an advocate for doctors and the state will enact new protections to enable doctors to focus on giving the best care, instead of fighting with insurance companies over administrative issues.

Last Friday, I spoke to the Medical Society of New Jersey on the issue of medical malpractice and my proposal to buttress recent reforms in Trenton with a professional screening of cases before they go to court, thereby reducing the probability of frivolous lawsuits.

And, in putting patients first, we will protect the privacy of medical records and strengthen the penalties for violating them.

But there is a different kind of transparency that we urgently need in our health care system. We must require large companies to disclose the number of their employees who are in low-income government health programs.

New Jersey taxpayers should know which corporations are shirking their responsibility to provide health care coverage and sticking taxpayers with the bill.  It is unacceptable that some of the largest and most profitable corporations in our nation are living off the taxpayer-funded safety net.

And in good conscience, no health care policy can ignore the shameful inequality in health care coverage for minorities.

In New Jersey, 23 percent of African Americans and 28 percent of Latinos whose health is at greater risk from a host of illnesses – lack any health insurance, compared with ten percent of white residents.

Many of the initiatives I have offered today will help reverse this inequality.

But we must do more to identify and solve the problems derived from health disparities.  I will make it a priority for state government to partner with providers, with New Jersey companies and nonprofits, to identify and solve health disparities.

I am proud of my successful efforts to secure $1.3 million in federal funding for the Institute for the Elimination of Health Disparities at UMDNJ’s School of Public Health.  The Institute has used this funding in part to support research to study the levels of lead in Newark Children, while implementing corrective policies.

Another building block for quality care is staffing.  We must, once and for all, address New Jersey’s shortage of health care workers.

My administration will work with UMDNJ, Rutgers, and community colleges to expand career training for a range of health care positions — from billing and claims processing, to scientists and laboratory technicians, to nursing and physician specialties.

If we are the “cure corridor,” we need the human capital developed in our colleges and universities to develop and apply the latest cures.

And as we discuss the future of health care in New Jersey, there is one final issue about which I want to be very clear.

I want to make it clear on one “long-term” debate the potential conversion of Horizon, the state’s largest insurer, to a for-profit company. I am absolutely opposed to any effort to use “windfalls” from the Horizon conversion to fill a state budget gap. If I am elected, this state will not sell assets for operating expenses whether it’s the Turnpike or our state-sponsored health insurer.

Prior to any application from Horizon to convert, I will not prejudge the actual merits of a conversion, except to say that if Horizon proposes it, I will ensure that New Jersey consumers are protected, and any proceeds from the change will be used only to expand and improve health care in New Jersey, just as the tobacco settlement should have been.

Today, I have set out the principles and proposals of my health care agenda.

Yet what I have offered is not an end, but a beginning, of taking the necessary incremental steps.

There are many health care perspectives that are important to the people of New Jersey that I have not addressed.  It is a complex subject.

Rest assured, I will have a lot to say and we will have a lot to do — about other issues like the need to ensure that seniors have long term care and the choice to stay in their homes with their families, addressing AIDS and HIV prevention and treatment, the continuance of Acting Governor Codey’s mental health policies, and advancing progress in diagnosing and treatment of diseases such as autism, childhood diabetes, spinal cord injury and many others.

If we meet the goals I have outlined here today, a healthier New Jersey will be in a position to grow and prosper while reducing the burden on state taxpayers. My plan means fewer families forced from having to resort to emergency rooms, it will put money back into the pockets of working families and help keep our businesses thriving and growing.

Again, my goal is to make access to affordable health care available to 95 percent of New Jersey citizens, and cut costs for families 10 percent below what they otherwise would be.

When I announced my candidacy last December, I said I was running for Governor because I believe in community and concern for each other.

I am determined to lead a state government that gives citizens value for their hard earned tax dollars and respects the values that hold us together.  This state must be on a path to greater affordability.

These challenge and the values I hold are what brought me into this campaign and led me to these ideas. They will guide me in the months ahead, and — with the support of the people of New Jersey they will guide me in the State House every day for the next four years.

Thank you.