Hundreds of thousands of government workers are on the march in New Jersey as a battle over health care premiums reaches a breaking point, and the fallout could have financial implications for millions of Garden State taxpayers .
A coalition of at least 14 unions will gather at the Statehouse in Trenton on Tuesday, delivering what could be the final salvo before state health boards vote on proposed rate increases of more than 20% for health plans that cover more than 800,000 state and local government workers, including more than 100,000 teachers.
The vote was originally scheduled for late July, but a leaked copy of the proposal sparked a firestorm and the meeting was canceled following public backlash from local governments and state lawmakers.
The State Health Benefits Commission, chaired by New Jersey Treasurer Elizabeth Muoio, is now due to meet on Wednesday for a vote on the proposal. If approved, it would increase premiums by about 21% for state workers and local government rates would increase by about 24%.
Employees would see their annual bonuses increased by about $1,500 to $1,800 on a typical family plan, which would equate to a pay cut of up to 1.5%, according to union leaders, who spoke to reporters on Friday during of a virtual press briefing.
But the financial burden would fall most heavily on local governments and school boards, which can pay up to 70% of the total premium on benefits. Many are just beginning to deal with soaring costs and dwindling federal aid, and they have only one source to tap into when incomes run out: property taxes.
“This has significant ramifications for local budgets and for our employees because it is a shared obligation,” Mike Cerra, director of the League of Municipalities of New Jersey, told NJ Advance Media. “This affects every property taxpayer as well as every employee. If you’re an employee paying property taxes, it’s a double whammy.
Union leaders say they have better solutions to help mitigate rising costs, and they have asked state leaders to postpone Wednesday’s vote and continue negotiations that just began in earnest last week.
But state leaders say time is running out before open registration begins in October. And the months-long saga has strained political ties between Democratic Gov. Phil Murphy and the unions that helped bring him to power.
A post-pandemic surge in demand for health services and record inflation are the two main forces behind the massive increases, according to AON, the risk management firm that the Treasury hired to do the analysis. rate this year.
COVID-19 has sent shockwaves through the global economy in 2020, and the ripple effects have created unexpected financial challenges for government leaders. The pandemic, coupled with widespread shutdowns, has pushed the struggling US healthcare system to breaking point.
State leaders predicted a rise in medical claims in 2021, but the rebound has been much bigger than expected and insurance premiums are rising nationwide for both private and public plans.
But the magnitude of this year’s increase puts New Jersey in a league of its own among states, and the rate hikes are about 20 points higher than typical annual adjustments, which have hovered around 3-5% these last years. Premiums were increased by about 2.9% for the 2021 plan year, and state employees saw an increase of about 2.4% in 2022.
Union officials want to know why New Jersey is an outlier, and they’ve urged the Murphy administration to use some of the $1 billion in federal COVID aid the state still has available.
“If this is a COVID-related crisis, then use the COVID money for god’s sake,” said Jim McAsey, mobilization coordinator for the Communications Workers of America, the largest union of workers. state workers, to NJ Advance Media. “Don’t raise worker rates. Don’t raise taxes for New Jersey residents. Work with us to truly reduce costs.
The whole process of adjusting rates this year has left local government workers and leaders scratching their heads, and several questions remain unanswered even as the administration pushes ahead with Wednesday’s vote.
State lawmakers, union representatives and local government leaders were blindsided by the proposal in July and only learned of the rate increases when they were disclosed just days before health boards approved them. .
“There really hasn’t been a public engagement on this,” Cerra said. “If the state is right and it’s a hiccup, it might be appropriate to allocate (US bailout) funding for that to give us time to find a better long-term solution. “
“This is a serious problem, and it needs to be addressed. Skipping a raise of more than 20% shouldn’t be an option at all.
New Jersey public workers have other options for benefits, but the state’s programs are widely considered to be among the most generous in the country. Some argue that the plans are too generous and that public servants do not pay enough for the benefits.
Cerra acknowledges there is some truth in this when it comes to legacy plans – those for older workers who are grandfathered – but government leaders are making progress.
“The plans on offer right now aren’t as generous as people think they are,” he said.
Workers also have the opportunity to make cost-effective adjustments to their benefits through worker representation on committees that define and approve changes to the design of state health plans, the gate said. -state treasury spokesperson Danielle Currie to NJ Advance Media.
Currie added that design committees must pass annual resolutions to contain costs on things like out-of-network benefits and mandatory use of generic drugs.
“These measures have delivered substantial savings over the past few years and without them rate increases will be even higher than expected,” Currie said. “But so far this year, PDC union members have yet to agree to endorse them.”
The next design committee meeting is scheduled for Wednesday morning, but “a lot could change by then,” McAsey said, adding that the work is preparing a set of proposals to reduce costs.
“I think health care is a human right,” McAsey said. “Instead of pointing the finger at a specific group of workers who have been able to obtain reasonable health care benefits at a reasonable price, I would point the finger at people who are actively taking advantage of the health care system.”
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