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The State Health Benefits Commission on Wednesday approved a nearly 21 percent increase in state employee health plans and a nearly 23 percent increase in local government benefits.
But a last-minute deal after the meeting may ease the pain a bit for some public workers.
The new rates will affect health plans covering more than 800,000 state and local government workers, and could cause financial hardship for millions of New Jersey taxpayers.
After Wednesday’s vote, five unions joined Gov. Phil Murphy An administration that limits the increase in state employee contributions to 3%, shifting the rest of the financial burden to the state.
The leaders of the trade union, which is part of the union, said they have agreed to double the pay for specialists from $15 to $30 and to increase the emergency aid fee from $15 to $45.
The agreement applies only to state employee plans, but does not currently apply to local governments, which can pay 70% of total premiums for employee health benefits.
“We hope this agreement serves as a model for local public employees,” said Steve Tully, executive director of the American Council of State, County and Municipal Employees 63.
Murphy spokeswoman Christy Pease confirmed the deal.
“Recognizing the impact of a large rate increase on working families, the governor is working closely with state unions to help reduce the cost of the increase to state employees,” Pease said. “While rate increases are largely formulaic, today’s agreement will reduce the direct impact on members in some of our plans this year.”
Murphy has made several comments in recent days that a deal may be imminent and that he is committed to finding a better solution. During a call-in show on Tuesday, the Democratic governor said the 24% increase “seems too high.” There is no question.
“We will not stop trying to find common ground,” he said.
But the vote went ahead as planned on Wednesday and the meeting was chaotic in places, despite several objections from labor representatives and lengthy unanswered questions. The vote was 3-1.
Commissioner Dudley Berge abstained from the vote after raising several concerns related to providers, including Horizon Blue Cross Blue Shield of New Jersey.
“If these rates go through, we’re going to have a lot of immigration from local government,” Berge said at Wednesday’s meeting. “I don’t see any way it can happen.”
Berge is one of two board members who represent labor on the five-person commission, and local governments have no representation on the board.
Wednesday’s decision places a heavy financial burden on local governments, and the deal for the state-only system “creates inequity,” said Mike Serra, executive director of the New Jersey Municipal Corporation.
“I think what you’re seeing is that local governments are looking for more cost-effective options,” Cerra told NJ Advance Media. “Unless the administration steps in here and provides equality… it will be the result. Today’s action is short on depth.
A vote to approve the proposed rate hike was originally scheduled for late July, but that meeting was canceled after a leaked copy of the resolution sparked public protests from state lawmakers, labor organizers and local governments.
Union leaders had asked Murphy to delay Wednesday’s vote and continue negotiations in the early stages, and labor representatives on the health commission offered several resolutions on Monday to cut costs. The unions gathered at the State House on Tuesday.
Post-pandemic high demand for health care services and higher inflation are the two main forces driving the sharp increase, according to Aon, the risk management firm hired by the Treasury to conduct this year’s price analysis.
The ripple effect of the Covid-19 pandemic is driving up the cost of health insurance across the country in both the public and private sectors. But New Jersey’s rate of increase is two to four times greater than the average increase seen in other states, and 20 points higher than the typical annual price adjustment.
Labor representatives want to know why New Jersey pulled out and have urged the Murphy administration to use a portion of the $1 billion in federal Covid relief money it still has on hand.
If state leaders don’t take a hard look at the factors that continue to drive up health care costs, this will continue to be a problem year after year, he said.
“I hope the state legislature will begin to take a closer look at Horizon and begin to take a closer look at these core issues,” Tully said. Because the lack of transparency and accountability is…ridiculous.
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Derek Hall can be reached at dhall@njadvancemedia.com. Follow him on Twitter @dereknhall.
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