Hundreds of union workers rallied outside the Statehouse in Trenton on Sept. 13, 2022, to protest health care premium increases. (Dana DiFilippo | New Jersey Monitor)
Premiums under New Jersey性视界传媒檚 public health benefit programs must mount an even steeper climb than seen in recent years if the beleaguered plans are to stay solvent through 2026, actuaries for the state told rate-setting commissions Wednesday.
Active state workers性视界传媒 health care premiums should rise 19.7%, while听local government workers who remain on the public plan should pay about 36.9% more for their health care, the actuaries said at a State Health Benefits Commission meeting Wednesday.
When informed of the proposed hikes, John Donnadio, executive director of the New Jersey Association of Counties, said, 性视界传媒淗oly s***.性视界传媒
性视界传媒淭he increase is simply unsustainable for employers, employees, and property taxpayers. The current system, where local governments have no control over the design of health benefit plans, does not work,性视界传媒 Donnadio said.
Local governments have no seats on the two commissions that set public health plan premiums.听Their membership听is听split听between labor representatives and听administration听representatives, who听have听a majority on both bodies.
Mike Cerra, executive director of the New Jersey League of Municipalities, called the proposed increases 性视界传媒渦nsustainable性视界传媒 and warned they would further burden local governments and their taxpayers.
Even the plan for school employees should听see premiums rise by 31.9%, the actuaries said. That plan has escaped the steepest premium increases levied on the State Health Benefits Program and was granted some relief by 2020 changes that moved most of its enrollees to more cost-effective plans.
Retirees could also see steep increases. State Medicare retirees should pay 29.7% more in premiums, the state性视界传媒檚 actuaries said, and early local government retirees should pay 35.4% more.听
The proposed increases, which must still听be approved听by the State and School Employees Health Benefit Commissions, are the latest in a series of double-digit premium hikes seen in recent years, and they could prove a death knell for plans covering local government and school workers.
Cost spike
The Treasury in听听that local government workers性视界传媒 health plan had听听as rising costs drove towns and cities with larger, healthier workforces to cheaper options in the private market, leaving the state with a sicker, smaller, and more expensive risk pool.
Unions have听said听hospital pricing and the public plans性视界传媒 third-party administrators, Horizon and Aetna,听are to blame听for rising plan costs, which are outpacing increases in the private market and other state plans that have also been battered by the same trends.
性视界传媒淭he unholy alliance between the carriers and the hospital networks has caused this spike in costs, no matter what Treasury says,性视界传媒 said Peter Andreyev, president of the State Policemen性视界传媒檚 Benevolent Association.听
The proposed premium increases are likely to drive more municipalities to private options, and those departures will likely push premiums higher still.
性视界传媒淭he expectation is that employers who leave the plan are lower cost on average, which leads to a higher-cost pool, which is going to increase costs further beyond expected trend increases,性视界传媒 said John Tappe, a vice president at Aon, the state性视界传媒檚 actuary.
The plans性视界传媒 cost drivers remain听largely听unchanged from previous years. Service and drug prices are increasing, utilization is up everywhere except in-patient services, and more and more public workers are using expensive weight loss drugs like Wegovy.
On top of those drivers, school and local government worker plans are struggling to maintain their reserves.
Those plans aim to have听enough in听reserves to cover two months of claims, but the school plan听is projected听to have enough听in听reserves for only half a month.
Last year, premiums were designed to bring in 3% more than costs to rebuild plan reserves, but they missed that target. State actuaries on Wednesday recommended doubling that target to 6%. The plans would need to increase premiums or reduce costs to reach that level of margin, and the increase is a significant driver of the proposed premium hikes for 2026.
All three plans operated at a loss in 2024 and 2025. Cost overruns for the school plan reached $254 million this year, while the state workers性视界传媒 plan lost $232 million. The local part saw a deficit of $57 million.
to the local part of the State Health Benefits Program, which are needed to keep the latter plan solvent, are also driving up premiums. It remains unclear whether the local side will be able to repay those loans.
Treasury性视界传媒檚 May report said the state may need to wind down the local part of the State Health Benefits Program altogether, a possibility decried by one of the State Health Benefit Commission性视界传媒檚 labor members.
性视界传媒淲hile closing the local part of state health benefits may be bureaucratically attractive, it性视界传媒檚 unconscionable. Over 300 municipal and county governments rely on state health benefits to provide them with health insurance,性视界传媒 said Dudley Burdge, the commission性视界传媒檚 AFL-CIO representative for local government employees.
It性视界传媒檚 not clear when the State and School Employees Health Benefit Commissions will approve rates for next year. The bodies have rate renewal meetings set for later this month, but Danielle Schimmel, the State Health Benefit Commission性视界传媒檚 chair, said individual members性视界传媒 appeals might require the panel to defer setting rates until a later meeting.
calls for听members of the plan design committees to identify $100 million in savings within the state听part听of the State Health Benefits Plan, annualized to $200 million over 2026, which听is split听between the state性视界传媒檚 2026 and 2027 fiscal years.听It性视界传媒檚 not clear that those savings, if materialized, would slow premium growth.
