July 22, 2022
Hundreds of thousands of public workers, early retirees and school employees in New Jersey are facing potential rate increases of as much as 24% for health benefits under proposals being considered by the State Health Benefits Commission.
Rate increases being considered include a 24% increase for medical and a 3.7% increase for pharmacy benefits for active public workers, as well as a 15.6% increase in medical and a 26.1% increase in pharmacy benefits for public workers who retired before the age of 65, according to an email sent to county administrators from New Jersey Association of Counties Executive Director John Donnadio.
Donnadio said in the email that the figures, which haven’t been made public, were shared by an insurance and benefits broker.
New Jersey Treasury spokeswoman Jennifer Sciortino acknowledged rate increases were being considered and added that rates for active members and early retirees would likely increase between 12-20% across the various plans for the upcoming year.
A vote to approve the rate increases was scheduled for Monday, but the state health benefits board and the Division of Pension and Benefits postponed the vote after acknowledging during a public meeting on July 13 that more time would be needed to address questions and concerns, Sciortino said.
“As has been the official process for many years now, the presentation materials provided to the State Health Benefits Program and School Employees Health Benefits Program Commissions last week are confidential until the rates are finalized,” Sciortino said.
The New Jersey League of Municipalities on Wednesday sent an email urging members to contact their representatives and the governor’s office, prompting a public outcry from state and local governments, as well as Democratic and Republican state lawmakers.
“This is a staggering increase that will saddle taxpayers, public sector workers and educators with higher costs at a time when we are all contending with inflationary pressures and a possible recession,” New Jersey Senate President Nick Scutari, Senate Majority Leader Teresa Ruiz and Senate Budget Chairman Paul Sarlo said in a joint statement.
The Democratic state senators urged the board to reject the proposal and called on New Jersey Treasurer Elizabeth Muoio to use her authority to block the planned approval “and make sure a full accounting of the finances of the two health benefits’ plans is made public and fully discussed.”
Republican leadership in the state Legislature on Thursday called for the creation of a special legislative committee to investigate Democratic Gov. Phil Murphy’s administration for a “failure to control health care costs for public employees, retirees and taxpayers.”
“The 24% premium increase proposed for most active employees will take thousands more out of their paychecks annually and lead to huge costs for local governments that will translate into higher property tax bills for struggling families,” Senate Republican Leader Steven Oroho, R-Sussex, said in a statement. “We must investigate the failures that led to these catastrophic premium increases to develop an effective plan going forward.”
The proposed rate increases shine a new spotlight on allegations that the Murphy administration squashed an attempt to recover $34 million the state paid to Horizon for a cost savings program that outside consultants found “yielded no apparent savings,” according to a report from Bloomberg.
Horizon administers health care plans for state and local government employees and retirees in New Jersey.
“It’s absolutely scandalous that high-level administration officials would intercede to prevent Horizon from being held accountable as premiums are set to skyrocket,” Senate Republican Budget Officer Declan O’Scanlon, R-Monmouth, said in a statement. “Employees, retirees, and taxpayers deserve to know why.”
Sciortino said several “extraordinary factors” are affecting rates for the coming year, including higher utilization of medical services during the COVID-19 pandemic and a return to normal services and procedures that had been previously postponed.
Those factors are being compounded by rising prices amid historic inflationary pressures that have increased health care costs nationwide.
“While there is significant volatility in health care trends, the rate increases for the State plans are in line with rate increases that our consultants’ other clients are experiencing and are also being reported nationwide,” Sciortino said. “We believe that these circumstances are an anomaly, rather than the norm, and we believe that it is more likely than not that utilization and costs will normalize.”
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