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The New Jersey Statehouse in Trenton. (Photo: Kevin Sanders for the New Jersey Globe).

County, local governments sound alarm over possible health benefits program rate hike

24% increase was initially scheduled for vote on Monday, but has been postponed

By Joey Fox, July 21 2022 12:36 pm

With the New Jersey State Health Benefits Commission (SHBC) floating a plan to hike rates on the State Health Benefits Program by as much as 24% for 2023, representatives from New Jersey’s county and local governments are warning of the disastrous effect such a hike could have.

According to John Donnadio, the executive director of the New Jersey Association of Counties, the SHBC wrote a report enumerating the hike and shared it with insurance brokers on July 13 – a report that has yet to be released to the public.

Yearly rate hikes are usually in the range of 3-5%, so a 24% increase would be a major step up. Donnadio said that if it comes to pass, such a hike would take a heavy toll both on governments and their employees.

“Statewide, this will cost hundreds of millions of dollars,” Donnadio said. “Not only local governments and property taxpayers, but the employees are going to struggle with this as well.”

Jennifer Sciortino, a spokesperson for the state Treasury Department, said that Covid and inflation have both contributed to the projected hike, which she added is likely to be an “anomaly.”

“While there is significant volatility in health care trends, the rate increases for the state plans are in line with rate increases that our consultants’ other clients are experiencing and are also being reported nationwide,” Sciortino said. “We believe that these circumstances are an anomaly, rather than the norm, and we believe that it is more likely than not that utilization and costs will normalize.”

A vote on the hike was scheduled for next Monday, but it’s been postponed, a decision that Sciortino said was made at the July 13 meeting. That may give time for county and local governments as well as the unions representing their employees to push for changes.

“I think that the increases are just unsustainable,” Donnadio said. “I think that the commission, I think that the administration, and I think that our state leaders have to do a much better job at negotiating lower rates, or we’re going to recommend to our members that they leave the State Health Benefits Program.”

In response to the news, state Republicans have begun lambasting the state government and the Murphy administration, laying the blame for the increase at the governor’s feet.

“Governor Murphy has completely failed to control health care premiums paid by the state, local governments, and active and retired public employees,” Senate Minority Leader Steven Oroho (R-Franklin) said in a statement. “We must investigate the failures that led to these catastrophic premium increases to develop an effective plan going forward.”

Legislative Democrats have also expressed their dismay; Senate President Nick Scutari (D-Linden), Senate Majority Leader Teresa Ruiz (D-Newark), and Senate Budget Chairman Paul Sarlo (D-Wood-Ridge) released a joint statement this afternoon pushing for the proposal to be rejected.

“This is a staggering increase that will saddle taxpayers, public sector workers and educators with higher costs at a time when we are all contending with inflationary pressures and a possible recession,” they said. “We urge those with approval authority to reject the plan that was suddenly scheduled for action with little notification and no real justification.”

This story was updated at 2:04 p.m. with a statement from Minority Leader Oroho, and again at 2:51 p.m. with details and clarifications from the Treasury Department. It was updated for a third time at 3:58 p.m. with a statement from Senate Democrats.

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