With “astronomical” insurance premium hikes anticipated for next year, Gov. Phil Murphy and legislative leaders are seeking to cut $100 million from the cost of providing health care for hundreds of thousands of state workers in New Jersey, NJ Advance Media has learned.
Murphy, state Senate President Nick Scutari, D-Union, and Assembly Speaker Craig Coughlin, D-Middlesex, agreed Monday, as part of their ongoing state budget negotiations, that a committee of union leaders and administration officials must identify as much as $100 million in savings by the end of the year, according to three sources close to the discussions who requested anonymity.
The state pays the majority of the cost of health benefits for state workers, and prices charged by hospitals and doctors have been surging while demand has been high.
The annual cost of public worker coverage in New Jersey was $22,000 in 2023, according to a recent state Treasury Department that called for broad change to the plan to save it. That’s 60% more than average cost of private and public sector plans nationally.
The budget deal angered at least one public employee union leader, who called the decision “a total violation of collective bargaining,” and “unacceptable” to the hundreds of thousands of public workers who will likely see their benefits diminished.
The 450,000 state, county and local government workers and retirees in the State Health Benefits Program have had to absorb double-digit increases in their insurance premiums, which have collectively soared 59% for municipal and county workers and 40% for state workers since 2022.
Next year, the increases will continue to rise “astronomically,” two sources who are not authorized to publicly discuss the matter, told NJ Advance Media. One source said premiums could rise as much as 30% for local government workers.
The $100 million savings lawmakers seek would only affect the state workers.
If there is an impasse between unions and state officials, it “would give the Treasurer the authority to set whatever rate she wants,” and “hit our members with higher deductibles,” said Steven Tully, executive director for Council 63 of the American Federation of State, County and Municipal Employees.
Meanwhile, insurance companies and medical providers set rates as they deem fit, without being transparent about the actual cost of care, Tully said. He called it “a racket the mafia would envy.”
Tully said he and other union leaders are discussing how they will respond to the mandate to reduce health care spending. Public workers have held rallies at the statehouse in Trenton demanding lawmakers find a solution to soaring premiums.
Union members Tully said, are “working people and taxpayers, who may not have a reason to vote for Democrats. They are going to look at this as if (Murphy, Scutari and Coughlin) turned their backs on them.”
The entire 80-member state Assembly is up for election in November. Voters will also pick a new governor, with U.S. Rep. Mikie Sherrill, D-11th Dist., and Republican former state Assemblyman Jack Ciattarelli on the ballot.
The debate over the cost of health insurance was one of the final points of contention in the budget negotiations. Three sources say they have a deal in principle on the budget. Murphy must sign it before the beginning of the new fiscal year on July 1.
NJ Advance Media staff writer Brent Johnson contributed to this report.
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Susan K. Livio may be reached at slivio@njadvancemedia.com. Follow her on X @SusanKLivio.
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