TRENTON – Legislation sponsored by Senators M. Teresa Ruiz and Donald Norcross to create a new method of generating capital for programs designed to improve the quality of life for residents, particularly in the area of health care, and to reduce costs related to health care delivery was approved today by the Senate Economic Growth Committee.
“Too many residents are forgoing preventive care and turning to emergency rooms first for their health care needs, a problem which disproportionately affects urban areas,” said Senator Ruiz (D-Essex). “This is an opportunity to improve the healthcare delivery system in our communities through a program that encourages organizations to implement new and innovative methods that will focus on preventive care and early intervention. This is about really thinking outside of the box about how health care services are delivered and through that process determining how the system can be improved to better protect the health of residents but also to reduce costs.”
The “New Jersey Social Innovation Act” seeks to attract private funding for programs aimed at reducing the public cost of providing health care services to residents. The bill (S-2710) would establish a five-year pilot program aimed at encouraging private investment in preventive and early intervention health care and reducing public expenditures related to those services. The Economic Development Authority (EDA) will administer the program and oversee a study commission established by the bill.
Under the bill, the New Jersey Economic Development Authority (authority) will establish a social innovation loan pilot program to guarantee loan agreements among lenders, eligible non-profit or for-profit organizations, and public sector entities. The study commission will aid the EDA by determining a non-profit or for-profit to receive the investment funds from private investors, and issuing annual reports detailing the progress of the program. The bill also seeks philanthropic donations to provide the loan guarantee for lenders.
“Organizations outside of the public sector have proven successful in creating innovative programs to provide health care services to some of our most health- and economically-challenged residents,” said Senator Norcross (D-Camden/Gloucester). “Incentivizing private investment in additional programs that will improve health care outcomes for our residents and reduce the costs of health care is the right thing to do from both a health and an economic perspective. It just makes sense.”
Similar programs have been introduced to address prison populations in New York and in England, as well as homelessness in Massachusetts. New Jersey is the first state seeking to utilize social financing to address issues in the healthcare system.
The bill was approved by a vote of 4-0. It now heads to the Senate Budget and Appropriations Committee for consideration.