In her recent preview of the upcoming state budget, Governor Mikie Sherrill addressed the “serious structural deficit” facing New Jersey—a projected $3 billion gap exacerbated by the expiration of pandemic-era funds and looming federal cuts. The Governor rightly noted that “tough choices” are ahead to achieve a balanced budget without raising taxes.

As we navigate these fiscal pressures, however, we must be strategic. To maintain access to essential health services that provide long-term individual and societal benefits, budget reductions should not target primary and preventive care. Instead, New Jersey must spend smarter. Shifting our focus and funding toward foundational care, including primary and preventive care, and oral health, is a proactive strategy to improve outcomes and reduce the growing long-term cost of poor health that drives our deficits.

Addressing the Investment Gap
Data from the Quality Institute and other sources highlights why this shift is necessary. Despite the proven benefits of a primary care focused model, New Jersey continues to underinvest in this sector:

• National Rankings: New Jersey currently ranks 49th among states in primary care investment and 46th in number of active primary care providers per 100,000 residents.
• System Strains: We rank 41st in preventable hospitalizations, often because patients lack a “medical home” for ongoing or post discharge care.
• Reimbursement Disparities: As of 2024, we rank 49th among states for Medicaid primary care parity to Medicare. Recent changes to address the disparity have been weak and limited, with Medicaid increasing a limited number of primary care rates from 50% to 70% of Medicare rates. There is widespread agreement on the necessity of comprehensive primary care rate increases to 100% of Medicare rates.

Aligning with the Sherrill-Caldwell Transition Vision

The Governor’s emphasis on smarter spending aligns with the recommendations from the Sherrill-Caldwell Transition Action Teams. The report, “Affordable Healthcare: Addressing Washington’s Medicaid Cuts,” advocates for bolstering the health care workforce and strengthening primary care in clinical and community based settings along with other long called-for changes in plan design and payment.

A Strategic Blueprint for Action

True fiscal responsibility means investing where it matters most by prioritizing areas that lead to longer term health benefits and a healthier New Jersey. By implementing the following reforms, New Jersey can build a more resilient and cost-effective health system:

1. Establishing Medicaid-Medicare Parity for Primary Care: Aligning Medicaid primary care rates with Medicare levels would create a “rate floor” that ensures coverage translates into actual access to care. At the Quality Institute, we built a consensus plan for Advancing Primary Care. You can dig deeper and read our 2026 policy paper with recommendations for this budget year.
2. Modernizing Medicaid’s Pediatric Oral Health Rates: We must lift the 19-year freeze on Medicaid’s pediatric dental rates to provide fair payment rates for necessary dental care. Despite contract requirements designed to ensure that all children enrolled in Medicaid have access to preventive dental care, the Quality Institute found that is not the case. Not surprisingly given these findings, 36% of our state’s third graders suffer from untreated decay and not enough children receive regular dental care. We urge passage of the Healthy Smiles Act.  For more information, read the Quality Institute’s Secret Shopper Report on Oral Health.
3. Investing in Graduate Medical Education for Primary Care: Prioritizing funding for residency slots in Primary Care, OB/GYNs, and clinical placements for midwives is essential to securing the workforce our state needs for a healthy future.

Strengthening our primary care foundation is not a luxury; it is a necessity for a stable fiscal future. By addressing health needs early and strategically, we can fulfill the Governor’s goal of a more efficient government that delivers better outcomes for every resident.