Around this time each year, state agencies, preparing for the next fiscal year budget, start communicating their needs to the Governor’s office and the Office of Management and Budget. That means now is the time — indeed, the last time — for Gov. Murphy to leave a legacy of reformed health care spending designed to support the stronger and more equitable health care system his administration has called for and prioritized. Now is the last chance to fix the long-standing imbalances in health care spending that have contributed to poorer and less equitable results than Garden State residents deserve.

The Murphy Administration has made significant investments in Medicaid, the program that supports lower income individuals, frail older adults, and covers 30 to 40 percent of births and 50 percent of children in New Jersey. The program now covers about 1.8 million New Jerseyans and annually costs $19.4 billion in federal, state, and other funds. Most of those funds initially go to the five managed care organizations (MCOs) that run the program under a contract with the state. Spending more on health insurance programs does not necessarily translate into better access to care or more timely care for the people enrolled in Medicaid.

In fact, in New Jersey, even though overall spending on the Medicaid program has increased, the last time Medicaid comprehensively raised its rates for children’s oral health was 2007. Oral health is the gateway to overall health. It is the starting point for self-confident smiles, for good nutrition, school attendance, and success. Also, New Jersey’s Medicaid rates for pediatricians, family medicine practices, and non-academic hospital affiliated primary care are some of the lowest in the country, coming in at about 50 percent of Medicare fee for service rates. It is no wonder that many clinicians provide free care on a case-by-case basis, but do not want to participate in Medicaid because they don’t receive fair rates for seeing patients. The commercial rates in New Jersey for primary care are also low compared to other states — at about 98 percent of Medicare rates.

Several years ago, the Governor created a State Health Benefits Quality and Value Task Force to issue recommendations for improving the State Health Benefits Program. Unsurprisingly, the report powerfully made the case that “a strengthened and more robust primary care infrastructure is critical to improving overall value and quality of care …” The Task Force encouraged building up the primary care infrastructure throughout the state. It noted that although payments to primary care providers constitute less than 10% of total claims costs for the state plan, primary care practitioners have the potential to influence greater than 50% of total claims costs, including the cost of prescription drugs, diagnostic labs and imaging, as well as emergency department usage and hospitalizations associated with chronic medical conditions.

More recently, the Governor’s Office of Healthcare Affordability and Transparency issued a report on Healthcare Access and Quality. That report found that the percentage of people seeing a primary care provider in the last year was declining, and it found disparities across race and ethnicity for those who reported having a usual place for primary care.  Other core quality measures that align with strong access to primary care were also found lacking, such as childhood vaccination rates.

At the Quality Institute, at the State Legislature’s request, we convened a group of insurers, primary care physicians, mental health providers, and patient advocates to produce recommendations for advancing primary care. The 2024 report, Primary Care in New Jersey: Findings and Recommendations to Support Advanced Primary Care set forth the evidence for a strong primary care foundation that focuses on wellness, results in better overall outcomes, improves health equity, and over time lowers overall spending.

Compared to other high-income nations, U.S. adults are the least likely to have a longstanding relationship with a primary care practitioner. We know that the shortcomings of our primary care system disproportionately impact racial and ethnic minorities and people in rural communities, worsening health care disparities.

Now is the time to create change. In its last budget, the Murphy administration can leave a legacy of health care quality and equity by right-sizing Medicaid spending on primary and preventive care. New Jersey must stop paying some of the lowest rates in the country for primary care, pediatrics, and oral health. Low payment rates discourage clinicians from accepting Medicaid and from choosing to pursue a career in pediatrics or primary care. Today, those low rates are already baked into the Medicaid system’s assumptions for calculating its payments to the MCOs. We must break that mold — today — and create a new recipe for the kind of care that will keep us healthier.