COVID-19 is not the only public health crisis facing our state. Long before the pandemic began, millions of residents struggled with substance abuse disorders, mental illnesses, heart disease, diabetes and more. In response to these ongoing issues, our state has put millions of dollars towards programs and services to help combat the opioid epidemic, discourage smoking, and promote other positive health outcomes throughout New Jersey.
The goal of these programs is to improve public health while simultaneously saving the people of our state money by addressing the key causes of many medical crises.
Since the 1980’s, federal legislation has mandated that anyone in need of emergency medical care be able to receive it, regardless of their ability to pay. That means New Jersey taxpayers often absorb the cost of subsidizing medically necessary care for residents with the inability to pay through programs such as Charity Care. The cost to fund this State program is well over $250 million each year.
Since residents should not and will not ever be denied the emergency medical care they need, our focus must be on reducing the overwhelming need for that care in the first place.
That’s why ten years ago, a friend and I hatched a concept in graduate school that I have worked to advance ever since. The New Jersey Social Innovation Act – initially sponsored by former Assemblyman Angel Fuentes and carried on by myself – seeks to establish a more cost-effective, low-risk way for our state to improve public health.
While the programs/services I mentioned above are important in our efforts to combat various public health crises, direct funding leaves the taxpayer responsible for the cost of those services regardless of their actual outcome. That means our state would still be on the hook for any well-intentioned ideas that ultimately do not impact public health the way we hoped they would.
Under the Social Innovation Act just signed into law, the State will initiate a pilot program where we guarantee loans from private investors on behalf of eligible non-profit and for-profit organizations seeking funding to implement services that improve public health.
Now where this differs from existing funding is that our state would only pay the loans back in proportion to the effectiveness of those services. If an organization only met half of the agreed-upon terms for example, the government would only be responsible for repaying part of the loan.
The agreement between the government, organization and private lender would include specific terms regarding how the public health services will be measured and verified, how the public sector savings will be calculated, what the interest rate will be, and how repayment will ultimately work.
Essentially, this means we would only ever pay for services that are verifiably effective at improving public health and saving taxpayer dollars in the long run by addressing the root cause of an issue, rather than waiting until the problem is more severe and costly to fix.
There are countless ways our state could benefit from a program such as this.
One example would be substance abuse treatment services. If our state enabled an organization to provide treatment that helped people stop using opioids, those residents would be at reduced risk for overdoses and would therefore no longer need emergency room visits and free overdose antidotes.
Another option could be providing housing to homeless residents to prevent them from being ‘frequent fliers’ at their local emergency room due to medical issues exacerbated by their lack of housing. In fact, Massachusetts implemented a similar ‘pay for success’ model to reduce homelessness and save money, and has experienced immense success with its program.
In these scenarios, everybody wins – we not only save money, we save lives.
I can think of no better cause for our state – especially at a time when we are struggling with countless public health challenges – than finding a way to effectively reduce public sector costs by improving public health. It is my hope this pilot program will pave the way for long-term, statewide expansion of this cost-effective arrangement.
The pilot program will be up and running in just a few months, so any entities interested in participating should take a look at the bill text to learn more. I encourage private lenders and eligible organizations to get in on the ground floor of this innovative new program to help make our state a better place and benefit everyone involved.
This opinion piece was originally published on NJ.com/Star Ledger on February 11, 2022: https://www.nj.com/opinion/2022/02/legislator-we-want-to-keep-you-healthy-but-only-use-tax-money-to-pay-for-programs-that-work-i-opinion.html