New Jersey health care spending jumped past state affordability target, with prices driving much of the increase
NEW JERSEY — Health care spending in New Jersey rose sharply in the most recent year measured under the state’s affordability program, increasing faster than the growth target policymakers set to keep care from becoming steadily less affordable for families, employers, and public budgets. A January 2026 benchmark report issued through the state’s Health Care Affordability, Responsibility, and Transparency, or HART, program found that per-person total health care expenditures rose 6.1% from 2022 to 2023, climbing from $10,663 to $11,319. The state’s benchmark for that period was 3.5%, meaning actual growth exceeded the target by 2.6 percentage points.
The increase was not limited to one corner of the system. On a per-person basis, total medical expenses rose 5.4% in the commercial market, 7.0% in Medicare, and 7.4% in Medicaid over the same period. But one of the clearest recurring findings in New Jersey’s affordability work is that, in the commercial market, rising costs appear to be driven more by higher prices than by residents suddenly using much more care. A governor’s office summary described the pattern plainly, saying commercial spending growth was driven by “rising health care prices” rather than increased use of services. A separate state cost-driver report on commercial insurance from 2017 to 2022 pointed to the same price-led pattern, especially in outpatient settings, where increases in average price played a major role across multiple service categories.
The question, then, is why prices keep rising. Part of the answer may lie in hospital market power and operating costs. A Hospital Labor Costs Special Report released this month found that hospitals’ operating costs per discharge rose substantially over time, with labor making up a major share of hospital expenses and New Jersey’s labor costs per discharge running above national figures in the report’s comparisons. At the same time, hospital consolidation has reshaped bargaining power in parts of the state. A 2024 study of New Jersey hospital markets found that by 2020, six hospital market areas accounting for 71% of admissions qualified as highly concentrated under federal standards. The same study reported that the Morristown hospital market area had the highest concentration level among those examined, with an HHI of 0.58, a level that can affect negotiations between hospitals and insurers and limit the competitive pressure that might otherwise help restrain prices.
The affordability strain is not felt equally. New Jersey’s HART landscape indicators show that medical cost burden is highest among low-income residents, while state summaries found that Black residents experienced the worst outcomes on highlighted health measures and residents of Hispanic and Latino heritage fared worst on certain access measures. The data also point to geographic divides. Counties that performed better than the state average on quality measures were more likely to be in North or Central Jersey, while weaker performance clustered more elsewhere. Even within that picture, Morris County stands out in a complicated way: the county appeared stronger on several access and utilization measures, including relatively low uninsured rates and lower preventable hospitalization rates, yet residents and employers there still face the same broader pressures of rising premiums, deductibles, and negotiated commercial prices.
Workforce pressure could make the problem even harder to solve. The New Jersey Collaborating Center for Nursing’s 2025 report says New Jersey is among 10 states projected to face the largest registered nurse shortages by 2036. When staffing is tight, hospitals and other providers often compete more aggressively for workers, rely more heavily on costly short-term staffing, and absorb higher labor expenses that can eventually push through to prices. That does not explain all cost growth, but it adds another layer to a system already under pressure from price increases and concentrated provider markets.
The state’s HART program, launched by executive order in late 2021, is trying to do two things at once: measure what is happening and push the system toward slower cost growth through accountability and transparency. But New Jersey is operating inside a broader national trend. A KFF employer survey found that the average annual premium for employer-sponsored family coverage reached $26,993 in 2025, with workers contributing an average of $6,850, while national reporting has pointed to drivers including high-cost prescription drugs and rising use of services. For residents in Morristown and across New Jersey, the local affordability story is therefore both structural and personal: market concentration, hospital costs, and state benchmarks may sound abstract, but they show up in paychecks, premiums, deductibles, and the choices families make about care.