Public Spending, AFFORDABLE PLACE TO LIVE
Why we must empower New Jersey’s public sector workers with benefits reform
New Jersey taxpayers need to be aware of the potential hurdles they may face if changes are not made to the already bloated state health benefits program that provides health coverage for hundreds of thousands of public employees. The implications of ignoring this problem are not limited to the public employees and their families. Turning a blind eye to the escalating benefits cost in New Jersey affects the tax bill of every single resident of the state.
The existing plan’s design gives public employees zero incentive to prevent the hundreds of millions of dollars wasted annually on care that has no benefit. Healthcare premiums increased more than 20% in 2023, and they are expected to increase by an additional 7.4% in 2024. The state-supported plans are proven to be extremely costly, and it is time for state leaders to prioritize reform on savings and efficiencies while maintaining quality in the best interest of all public employees. Until then all taxpayers -of New Jersey who foot more than 90% of these costs – remain in the crosshairs.
Between the slow bounce back of pandemic recovery and rising inflation, the rise in consumer prices is likely unless our leadership in Trenton becomes more budget conscious. An industry actuary’s report found that the average healthcare cost for an employee in the New Jersey plan is $22,000 — that is $8,000 more per worker than the national average. Despite this already inflated price, at the end of last year, lawmakers approved an additional 20% premium rate increase that has thinned the wallets and pocketbooks of public employees and property taxpayers.
While the statehouse allocated $200 million of your state taxes to help cover the cost, state employees did not escape punishment and were ultimately tacked with a 3% copay increase. The rest of the bill for the premium increase went to the Treasury and taxpayers, which will almost assuredly lead to higher property taxes and less public infrastructure and welfare spending. Ultimately public employees were hit with both higher taxes and increased premium costs.
The definition of insanity is doing the same thing repeatedly but expecting different results. New Jersey’s political leaders have avoided this benefits issue for two decades, and the problem has compounded. New Jersey taxpayers need a break. It is time for state leaders to analyze all state benefits and provide state employees with quality choices that are economical for both the employee and the state’s bottom line.
Gov. Phil Murphy is well aware of this issue and policy solutions. Over fifteen years ago, he chaired a task force that recommended structural reforms to the state’s healthcare benefits programs that would have saved taxpayers $500 million if implemented. They weren’t. Likewise, former Senate President Steve Sweeney issued a 2019 Path to Progress report that offered needed reform recommendations. The statehouse chose not to act on the analysis’ recommendations.
In a recent report recommending health benefits plan reform, Regina Egea, president of the Garden State Initiative, said, “Any unwillingness to adapt New Jersey to the market realities of what it takes to compete with other states for jobs and residents just inhibits the growth of our economy.” Avoiding this outcome should be a top priority for every lawmaker in this state.
Based on Truth in Accounting’s Financial State of the States report, New Jersey ranked dead last in the nation for financial health. The money needed to pay its bills snowballed to $12.5 billion yearly, increasing the amount the state needs from each taxpayer to make itself whole to a whopping $58,700.
Taxpayers can only hope tumultuous state decisions will ultimately favor New Jerseyans. We can’t keep allowing our health benefits plan to exacerbate our budgetary problems. The state needs to rein it in. The economic health of far too many of this state’s families depends on it.
Audrey Lane is the Policy Director for the Garden State Initiative.