Plan Will Save Hundreds of Millions A Year, Rein In Cost Of Government
TRENTON — Senate President Stephen M. Sweeney today unveiled a comprehensive package of reforms designed to responsibly deal with the issue of health benefits for public workers. The reforms will result in hundreds of millions of dollars in savings a year for local governments, allow mayors and other local elected officials to help rein in ever increasing property taxes, and provide a fair way to implement increased costs on middle and lower income public workers.
“Health benefits are a major factor in what drives up property taxes and this plan will finally do something about it,” said Sweeney (D-Gloucester/Cumberland/Salem). “We cannot continue with band aid measures for issues that deserve real solutions. It is time for action, not sound bites and meaningless political rhetoric that resolve nothing. Government must be run like a business, and this reform package is a major step in that direction.”
Sweeney added that he expects his legislation to be worked on over the course of the next several weeks so that New Jersey public entities will have real and practical solutions to deal with the issue of rising health care costs on a permanent basis. Sweeney commented that securing increased contributions from public workers is key to normalizing the disparity with the private sector but that alone will not address the fundamental long term challenges with the rising cost of health care.
“This is about saving local taxpayers hundreds of millions of dollars a year when fully phased in, while at the same time not putting such a heavy burden on workers that they can’t afford benefits. Moreover, this will provide local elected leaders practical solutions on health care benefits that can be realistically implemented. Simplification, local control and balanced measures to address cost and quality are needed to remedy the issues,” said Sweeney.
In the private market place, employers offer their workers choice in coverage, allowing employees to pick plans based on the coverage that may best suit their needs and having employees contribute based on the level of coverage they select. National studies reveal that when engaged, health care consumers make more informed decisions which in turn lead to better outcomes and reduced cost. Choice also means opening the markets to more solutions and increased competition which generally breeds lower costs and increased quality. Choice in coverage options and choice in insurance solutions will create a better climate for competition and reduced cost at all levels. Another challenge facing New Jersey is the fact that the state is actually in the health insurance business through its administration of two State Health Benefit Plans that school districts, municipalities, counties and other local government units can elect to participate with.
“There are mounting losses and artificial subsidies affiliated with these plans, which has created yet another ‘ticking fiscal time bomb’ for taxpayers. The bottom line is the state should not be in the insurance business. Just like when the state deregulated the auto insurance business, we need to do the same thing here by getting out of the health care business for local governments”, said Sweeney.
The Sweeney plan would:
▪ Increase Employee Contributions so that they are more in line with the private sector. This would be phased in over a seven year period commencing with the expiration of each collective bargaining agreement (with a shorter phase in for an employee with single coverage). Lower-income employees would contribute a smaller percentage.
▪ Mandate that each board of education and local government create an “Employee Benefits Quality, Cost and Delivery Committee.” The committee would create a collaborative framework at the local level where labor leadership from each local unit will work with elected leaders and policy makers to find the best vendors, solutions and approaches to health care. Additionally, a wellness program would have to be established, and incentives based on healthy habits built into the premium structure. Moreover, local employers would have to conduct dependent audits (as NJ is required to do under recent pension and health law overhauls). This will ensure that only eligible dependents are covered.
▪ Mandate that all local governments and school districts provide a menu of different health benefit options for employees to choose from, with no fewer than five heath plans available. This would allow workers to have “choice” based on family status, age and desired levels of benefits.
▪ Place an immediate moratorium on local governments entering the State Health Benefits Plan and school districts and educational employers from joining the State Educator’s Employee Benefit Plan. Based on mounting losses and the overall economic position of the state’s fiscal health, the state should not assume any additional financial liability without proper due diligence.
▪ Promote increased generic utilization and bulk pricing for pharmacy benefits to help reign in pharmacy costs.
“For New Jersey’s small towns, who already are dealing with extreme pressures, the Senate President’s plan will be a fiscal life line,” said Lambertville Mayor David M. DelVecchio, president of the New Jersey Conference of Mayors. “The overwhelming number of municipalities across the state will be able to pass along the greatest amount of property tax relief to their residents through this sensible plan. And it would be fair to the dedicated employees who work hard to give our residents the best possible quality of life.”
“One the biggest issues local officials have to face is the escalating health care benefit costs for employees,” said Camden Mayor Dana L. Redd. “Senate President Sweeney’s plan addresses this problem in a smart, workable manner. This reform package calls for a fair and equitable approach based on annual employee earnings and gives mayors a legislative tool to control escalating and rising health care costs.”