School employees face 34% health premium hike as state delays vote

New Jersey school employees are facing a potential 34% increase in health insurance premiums next year, but state officials have delayed their final vote for three weeks while they search for ways to reduce the staggering hike.

The School Employees’ Health Benefits Program Commission voted July 27 to postpone action on rates for active employees until Aug. 19. It approved increases of 11.3% for retirees who are not on Medicare and 6.2% for Medicare retirees, effective in January.

“Thanks to the advocacy of NJEA members, the SEHBP Commission voted to wait another month before approving the 2027 health insurance rates for school employees,” the New Jersey Education Association said. “This allows the state more time to look for ways to lower the cost. We’re fighting for short-term fixes and long-term solutions.”

Actuaries attributed the proposed increases to rising prescription drug costs, declining enrollment and the need to repay money provided through a recent state relief law.

A 2020 law known as Chapter 44 prevents the plan design committee from changing benefits until January 2028, leaving the Legislature responsible for approving major cost-saving reforms. Treasury officials previously described the school health plan as being in a financial “death spiral.”

While she has not directly addressed rate increases for school employees, Gov. Mikie Sherrill has promised reforms to stabilize public-worker health plans and lower costs.

“The State Health Benefits Program has been pushed to the brink, putting coverage for hundreds of thousands of public workers at risk,” she said in her March budget address.  “So in the coming year, we’ll enact real reforms, with everyone at the table, to fix the program, keep it solvent, and bring down costs now.”

Sherrill also blamed part of the increase in health-care spending on prescription-drug middlemen and promised a broad overhaul of pharmacy benefit managers: