Trenton’s Health Benefits “Solutions” Fail NJ Taxpayers

A new report issued by the New Jersey State Treasury, researched by Aon, a management consulting firm, made the startling revelation that taxpayers are paying an exorbitantly higher rate for public employee health benefits than other employers. This,  despite claims from Governor Murphy and legislative leaders that 2020 reforms  should save taxpayers billions of dollars.

The Aon report finds that the U.S. average health care cost for an employee in an employer plan is $14,000. In New Jersey, the state pays $22,000, or 60% more than the national average.

The report found that the key drivers of the discrepancy were the state’s failure to enact key reforms, including unnecessary use of services, overly generous benefits and a lack of cost-cutting measures.

Specifically addressing the State Health Benefits Program (SHBP) / School Employees’ Health Benefits Program (SEHBP), Aon noted that while “Most U.S. employers mitigate cost by updating plan designs over time to incent more cost-effective consumer behavior which leads to cost reductions” the state plans have “plan designs have not seen substantial updates over the past few years” with taxpayers still bearing a high cost of the plan.

These revelations come as no surprise to anyone who has followed the Garden State Initiative’s work. In our 2019 report, Charles Steindel, Ph.D., utilized federal data, to find that the cost of public employee benefits in New Jersey far-exceeds those of other state government entities, let alone private sector employers.

With the State Health Benefits Commission last year voting to increase health insurance premiums by over 20%, it is clear that recent attempts to contain costs are failing.

If the Governor and legislative leaders are serious about containing these escalating costs there’s no shortage of places to look. A 2005 Benefits Review Task Force , convened by then-Acting Gov. Richard Codey (D) and chaired by then-citizen Phil Murphy, recommended reforms that would have saved approximately $500 annually. Those suggestions were ignored by the legislature. A similar fate awaited recommendations from the bipartisan Pension and Benefit Study Commission (aka  Byrne-Healey Commission) appointed by Gov. Chris Christie (R).  So ingrained is the failure to address this crisis is that a plan introduced by a Senate President, Steve Sweeney’s (D) Path to Progress, failed to result in any substantive reforms.

As benefit costs and property taxes continue to reach record highs, it continues to be clear that our elected leadership in Trenton lacks the will, or fortitude, to make the necessary reforms to reverse the trend and bring our state in line with the rest of the nation.

With the full legislature on the ballot this November, it will be voters’ opportunity to hold them to account.