Counties and cities weigh in on withdrawing state health plan

Counties and cities consider leaving state health benefit program after state commission rate increases approved by more than 20% last month, a potential exodus that could further destabilize the public benefits plan.

The scale of the increases and the process surrounding their passage have infuriated some local officials like Essex County Executive Joe DiVincenzo, who must now decide whether their workers and taxpayers would be better served by a different plan.

“They did everything in their power at the start to get as many counties, as many cities involved to make it easier for everyone else,” DiVincenzo said. “But there is no doubt: if people decide to take him somewhere else, there will be fewer people. It could cost more. These are things we have to weigh.

Counties and some cities move in and out of the state plan on occasion. Middlesex County insures its workers through the Middlesex County Health Insurance Pool and has done so for years.

It’s not yet clear how many local and county governments will opt out of the state plan in response to the rate hikes — increases blamed on inflation and a change in how workers used benefits during the lockdown. pandemic – but a sharp drop in the number of participants could drive the public worker health plan premiums even higher.

The state health benefit program is a self-insured plan, which means that employee contributions are used to pay for employee health claims. If claim amounts exceed premiums, rates go up, and if governments pull out, the pool of contributing workers shrinks. All of this could spell trouble for Governor Phil Murphy’s administration.

“They have a problem with local public sector unions. They have a problem with local elected officials, and they have a problem with the state health benefits program that’s going forward because if you have members – especially members with good experience ratings – who leave, it hurts the long-term viability of the program,” said John Donnadio, executive director of the Association of Counties of New Jersey.

According to Michael Cerra, executive director of the League of Municipalities of New Jersey, local officials are always researching whether alternatives are preferable, and that process alone can take months. Open enrollment in the state health benefits program was launched in early October and is expected to close at the end of the month, leaving a short track for any decision.

“It can’t be done this year because we have less than two months, and then we have to present our budget. And we have 26 unions, so you have to get everyone on board with the same thing, so it’s not going to be as easy as people think,” DiVincenzo said, adding that there is “no doubt” that the ‘Essex would weigh in on a different move. insurer.

The timing means Essex will have to find a way to pay the $21 million in rate hikes it expects this year. DiVincenzo said that would mean service cuts, tax hikes or, as a last resort, layoffs. Essex, the most populous county in the state, has about 3,600 workers and an annual budget of $865 million, according to budget documents.

While a pullback might make sense for counties and larger municipalities, smaller towns with fewer staff might struggle to find insurers who can give them a better deal.

“With 35 employees, no one is watching us. It’s not that they don’t want it — it’s cost-prohibitive in many ways,” Clinton Mayor Janice Kovach said.

No solution for locals

Although similar increases have been approved for state workers, an agreement between public sector unions and the Murphy administration will keep those increases to just 3%, up from 18% this year.

It’s unclear how this deal will work or how it will be paid for. The governor’s office directed an investigation of its mechanisms to the Treasury, which directed the investigation to the governor’s office.

There has been no similar relief for local and county workers, and the chances of such help appear increasingly slim despite calls from local officials to use American Rescue Plan Act funds to cover rate hikes.

In the absence of help, the Association of Counties of New Jersey has recommended that its members opt out of the state plan if possible. The League of Municipalities of New Jersey made no such appeal, although it did provide its members with information on how to make a withdrawal.

“At the county level, they’re certainly exploring their options,” Donnadio said.

Assembly Speaker Craig Coughlin (D-Middlesex) previously told Politico New Jersey he was “reluctant at best” to consider an infusion of cash to offset rate increases for local government employees. and the county, fearing that such an injection could increase costs in the years to come without actually tackling the rate hike.

There is little chance of direct financial assistance without legislative approval, but other reforms seem to have a better chance of materializing.

Several lawmakers from both parties have introduced bills to give county and local actors seats on the State Health Benefits Commission and its school counterpart, the School Employees Health Benefits Commission. County and local governments currently have no representation on either of these bodies.

“We are not at the table on this one. We’re at the door screaming,” Cerra said.

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