Sherrill, 17 state employee unions agree to waive 2027 health contribution increases

Gov. Mikie Sherrill and 17 unions representing state employees have agreed to waive higher health benefit contribution rates in 2027 while launching a joint effort to reform New Jersey’s financially strained State Health Benefits Program.

The agreement does not specify what structural changes will ultimately be adopted. Instead, it establishes a labor-management process that will bring unions, legislative representatives, plan administrators, insurers, health care providers and outside experts together to develop recommendations for the governor.

The state is required to establish the working group by Oct. 1. It will examine vendor contracts and program operations, claims review and eligibility verification, network changes such as Centers of Excellence and high-performance networks, plan and benefit design, participation rules, premium-contribution structures, governance and data transparency.

The health benefits system covers approximately 690,000 people through state employee, local government and education plans. The administration described it as one of the nation’s largest and most complicated public-sector health systems, with structural features that have limited its ability to innovate or respond quickly to rising medical and prescription drug costs.

“From Day One, I have been laser focused on making New Jersey more affordable, and that means tackling hard problems,” Sherrill said. “The severe financial challenges facing the State Health Benefits Program did not emerge in one year or from one decision, and there is no single fix.”

Sherrill said the effort is intended to preserve high-quality coverage while making the program more sustainable for public employees, employers and taxpayers.

Chief Operating Officer Kellie Doucette said the program’s financial instability is affecting communities throughout New Jersey and requires an urgent but deliberate response.

“This is a problem we must address now,” Doucette said. “Today’s agreement is an important step in that direction.”

The agreement comes as unions have criticized rising employee contributions and argued that public workers should not be expected to absorb higher costs without changes to the system itself.

Dennis Trainor, vice president of CWA District 1, said the deal protects state workers from increased contributions next year and gives labor a role in examining what he called the system’s “actual cost drivers.”

“Rising health care costs can’t be solved by asking workers to pay more year after year without addressing long-term systemic change,” Trainor said.

Steve Tully, executive director of AFSCME New Jersey Council 63, called the agreement a crucial step toward reforming the State Health Benefits Plan. He said it would prevent members from shouldering additional costs while creating an opportunity to make care more affordable for workers and taxpayers.

Several law enforcement unions also endorsed the agreement. Leaders of the State Troopers Fraternal Association, State Troopers Non-Commissioned Officers Association and State Troopers Superior Officers Association said they were prepared to work with the administration and other stakeholders on reforms that address employees’ needs while promoting fiscal responsibility.

The working group’s recommendations will be advisory, and the agreement does not establish a deadline for final reforms. The immediate result, however, is that state employees will not face higher health benefit contribution rates in 2027 while the administration and unions continue working on the program’s future.