(Bloomberg) — Public-worker unions in New Jersey have secured a deal to blunt the impact of a steep rise in their health-care costs in 2023, meaning taxpayers are likely to shoulder the bill.
The New Jersey State Health Benefits Commission voted Wednesday to authorize an increase to medical premiums for state and local government workers, which boosts costs more than 20% in some cases.
The price hikes, first proposed in July, have been a major source of conflict between public-sector unions and Governor Phil Murphy, a Democrat and former senior director at Goldman Sachs Group Inc. Unions rallied in the state capital Trenton on Tuesday, urging the state to delay the hikes while exploring other ways to offset the costs.
Initially, the committee vote looked like a clear defeat for the unions. But later some of the groups said they struck a deal with Murphy to cap what their members will contribute toward the more expensive premiums. Those workers will only face a 3% increase to their health-plan contributions, they said in a statement.
That means public funds will cover the rest. Local governments weren’t part of the deal, and they may have to raise property taxes or cut other services to fund their portion of the increased health-care expense. The state’s residents already pay some of the most expensive property taxes in the country.
Murphy spokeswoman Christi Peace said in an email that the governor “has worked closely with state unions to help mitigate the costs of this increase on state employees.” She didn’t respond to questions about how many workers were covered by the deal, or whether the state is drawing on other funds to offset the workers’ contributions.
New Jersey’s health plan covers more than 800,000 public-sector workers, dependents and retirees. The state expects to pay $3.7 billion for health benefits this fiscal year, up from $3.2 billion in the prior year, according to budget documents. The premiums are funded through a mix of contributions by workers and their taxpayer-supported employers.
Local governments will have to find revenue “to cover the increased costs that will be paid for by municipalities, local government employees and property taxpayers,” the New Jersey State League of Municipalities said in message to members. Local governments have the option of joining the state plan but aren’t required to, and the group suggested municipalities explore alternatives.
The state’s Health Benefits Commission, made up of three state government officials and two labor representatives, is in charge of approving the state health plan’s rates. The three state officials voted in favor of approving the rates while one labor commissioner abstained and another opposed it.
While some unions are insulated from the impact of the hike, Democratic lawmakers have still objected to the decision to raise premiums. They pointed to the fact that the last-minute bargain leaves out local government workers and doesn’t address the underlying issues which caused premiums to skyrocket initially.
“Ignoring municipalities will inevitably result in higher costs for taxpayers and workers,” Senate President Nick Scutari and Assembly Speaker Craig Coughlin, both Democrats, said in a news release. The pair urged the state boards overseeing the plan to “immediately start working on effective ways to stop this and future exorbitant increases.”
Vendor Oversight
A separate state committee also defeated a bundle of proposals on Wednesday, which labor unions had advanced and said would save the state health plan money. One of the proposals called for the state to assess whether outside vendors selling “point solutions,” aimed at cutting costs, actually work, and sever ties with those that fall short.
Labor representatives on the committee, called the Plan Design Committee, supported the additional oversight on outside vendors, while state government representatives opposed it, saying it was beyond the authority of the group.
Startups and established companies are increasingly selling technology and services they say lower expenses associated with health plans, but employers don’t have enough tools to assess whether they’re working. New Jersey has been in a simmering dispute with Horizon Blue Cross Blue Shield of New Jersey, its health-plan administrator, over one such program that has cost the state millions.
Last year, officials in the state Treasury office that oversees the health plan said Horizon didn’t deliver the promised service on a program designed to connect patients with efficient medical care. They attempted to recover $34 million the state paid in fees to Horizon, though later backed down after facing pressure from Murphy’s office.
Murphy praised Horizon executives at a meeting with state officials about the dispute, Bloomberg News reported in June. The governor said he didn’t intervene, though Republican lawmakers have called for an investigation. Horizon has disputed allegations that it didn’t comply with its contract. A spokesman for the company had no additional comment on Wednesday after the rates were approved. State Treasury representatives and Murphy’s office also didn’t comment on the matter.
A group of unions representing hundreds of thousands of New Jersey public workers is still insisting the state recoup the payments for the service.
“There’s a question of why we’re paying over $100 million a year in fees for that contract,” Dudley Burdge, a representative of the Communications Workers of America union who sits on the State Health Benefits Commission, said at the commission’s virtual meeting Wednesday. “Obviously that directly impacts rates as well.”
Treasury officials sent a letter to Horizon on May 11 saying the state would reinstate the dormant complaint about the disputed care-navigation program on May 27. The letter also said it would attempt to recover money related to that program.
As of August 8, though, the complaint had not yet been reinstated and a Treasury spokeswoman said then that discussions with Horizon were ongoing. An agency spokeswoman said Wednesday there were no updates.
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Source: bnnbloomberg.ca
