NJBIA's Public Policy Forum: The Road to Recovery REGISTER

Assembly Bill 3176

For the Assembly Health and Senior Services Committee meeting on April 5, 2018

On behalf of our member companies that provide more than 1 million jobs in the state and make the New Jersey Business & Industry Association (NJBIA) the largest statewide business association in the country, we respectfully OPPOSE Assembly Bill 3176, which prohibits the use of prior authorization by health insurance carriers.

NJBIA places a strong and consistent focus on the quality and affordability of health insurance in New Jersey. The cost of providing health coverage to employees is one of the most significant challenges facing employers today. It is consistently ranked the biggest problem facing our members in both our Health Benefits and Business Outlook Surveys.

While this bill may remove an administrative hurdle for physicians and patients in the practice of medicine, it will have the effect of undermining the managed care system. Prior authorization is an effective tool to manage healthcare expenditures by evaluating, before the services are delivered, that the service is necessary. If eliminated, these determinations would be made after the care is delivered, leaving the patient responsible for payment.

Studies have shown that unnecessary testing and overtreatment adds to healthcare costs, increase patient stress and, in some cases, increases the risk of harm to the patient (e.g., exposure to unnecessary radiological testing). A 2012 report by the Institute of Medicine estimated that 30 percent (approximately $750 billion) of U.S. health spending in 2009 was spent on unnecessary services, including other issues such as fraud and excessive administrative costs.

Also in 2012, the American Board of Internal Medicine Foundation (ABIM Foundation) established Choosing Wisely, a campaign aimed at reducing unnecessary medical interventions that waste money and can actually do more harm than good. In their 2014 survey exploring physician attitudes regarding the overuse of medical services in the United States the ABIM Foundation research found that nearly three out of four U.S. physicians say the frequency with which doctors order unnecessary medical tests and procedures is a serious problem for America’s health care system – but just as many say that the average physician orders unnecessary medical tests and procedures at least once a week.

In our 2016 Health Benefits Survey, employers reported that overall healthcare costs continue to increase by double digits, rising by an average of 10.5 percent. Our small business members were hardest hit, and saw their costs rise by an average of 12.3 percent.

According to our survey, the average cost for employee only coverage was $7,044 and $17,580 for family coverage.

The cost of health insurance premiums reached $7,663 for single HMO coverage and $21,911 for family coverage in the Northeast in 2017, according to the Kaiser Family Foundation (KFF) and the Health Research & Educational Trust (HRET) annual survey. The national average for all plans is $6,690 for single coverage and $18,764 for family coverage.

Healthcare costs continue to rise, and NJBIA is concerned that this bill severely restricts the use of a critical cost containment tool.

Employers are calling on the Legislature to alleviate those ever increasing costs, NJBIA respectfully requests that you vote no on this bill.

Thank you for your consideration of our remarks.

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