Chiera statement

New Jersey public workers costs among highest in nation

The rising cost of health insurance has become one of the greatest challenges in labor relations and bargaining contracts, according to AFT New Jersey president Donna M. Chiera, who was named to a newly-formed State Health Benefits Quality and Value Task Force last month by Governor Phil Murphy.

While health care costs have continued to rise across the nation at a higher rate than inflation, workers’ wages have only increased by 2.3% over the last year while inflation was 2.2%, according to the Kaiser Family Foundation. Employers have been shifting more of the costs of healthcare onto workers by charging them a higher share of premiums for plans with increasingly higher deductibles and fewer options.

With the implementation of Chapter 78 legislation that effectively took health insurance costs off the bargaining table since 2011, most New Jersey’s public sector workers have been paying significantly more every year both in percentage of premiums as well as increased costs of those premiums. Since that legislation only sunset after every group of public workers paid the highest tier of costs for at least one year, a few public employers (including AFT units in Perth Amboy and at Raritan Valley Community College have agreed to lower health insurance costs through negotiations. For the bulk of New Jersey public workers however, health insurance costs remain significantly higher in comparison to what public sector workers pay in other states, according to Rebecca Givan, an associate professor of labor studies and employment relations at Rutgers and treasurer of the Rutgers AAUP-AFT.

Members of the State Health Benefits Quality and Value Task Force

State Government Experts
• Department of Treasury (Treasurer Elizabeth Muoio)
• Department of Banking and Insurance (Acting Commissioner Marlene Caride)
• State Comptroller’s Office (Comptroller Philip J. Degnan)
• Department of Human Services (Commissioner Carole Johnson)

Health Policy / Procurement Experts
• America’s Agenda (Mark Blum)
• Princeton’s State Health and Value Strategies (Heather Howard)
• Rutgers Center for State Health Policy (Joel Cantor)
• Seton Hall Center for Health Law and Pharmaceutical Policy (John Jacobi)

Unions, Employers
• Communications Workers of America (Hetty Rosenstein)
• New Jersey Education Association (Kevin Kelleher)
• AFSCME (Steve Tully)
• American Federation of Teachers (Donna M. Chiera)
• International Association of Fire Fighters (Pete Nowak)
• Policemen’s Benevolent Association (Kevin Lyons)
• NJ League of Municipalities (Michael Cerra)
• NJ Schools Boards Association (Jonathan Pushman)

Professor Givan studied public sector health insurance across the country. “New Jersey public employees pay nearly 50% more towards our health insurance premium for a family plan, compared to the median public employee across the country,” she said. In addition to six union leaders, the task force is comprised (see accompanying list) of employer representatives, who typically advocate for employees to pay a higher share of premiums or accept lesser plans, as well as experts from within the administration and state and national health policy and purchasing experts. According to the Governor’s office, the task force will meet monthly to identify near-term opportunities for reform, including best practices in health management, cost savings for the commercial health benefits Request For Proposal (RFP) for active employees, which is currently provided by Horizon BCBS and Aetna, as well as recommendations for plan design opportunities by October 2018.

“By moving toward value-based care, and other smart purchasing strategies, in the State’s health benefits systems, we can lead by example in sharing our best practices and efficiencies with other health systems in the state, including Medicaid and the individual market,” said Murphy in the announcement.

Following the completion of that work, the task force will then explore more long-term and innovative reforms for the broader health benefits system and deliver a comprehensive report to the governor.

The governor also appointed members to the state plan design committees of the SHBP and the SEHBP so they can both start meeting again. Public sector union representatives on the state plan design committee have been working collaboratively to identify mutually-beneficial ways to cut costs and enhance benefits, according to Rutgers AAUP-AFT executive director Patrick Nowlan, who chairs SHBP plan design committee. “Union representatives on the plan design committee are proud to see continued growth of the Direct Primary Care model we championed, which saves members money while providing increased access to both routine and preventative medical care,” said Nowlan. “We will continue to investigate opportunities to both save money and offer additional healthcare benefits and look forward to working with the new task force and the Murphy administration.”

The State Health Benefits Plan (SHBP), which was created in 1961, and the School Employees Health Benefits Plan (SEHBP), which was created in 2007, provide medical, prescription drug and dental benefits to state employees, local education employees, participating local government employees, and eligible retirees. Combined, these plans cover 499,508 active members and 311,080 retired members.

Governor Murphy’s Fiscal Year 2019 budget includes $3.4 billion for health benefits coverage for members of these plans. This represents about 9.1 percent of the overall State Budget.

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