N.J. public workers, towns push big changes to avert massive health insurance rate hikes

After months of lobbying Gov. Phil Murphy’s administration, local government leaders and labor unions in New Jersey are now turning to the state Legislature for relief from double-digit rate hikes on state health benefit plans.

Premiums for local government workers are set to increase by 20% January 1 after a state health board voted in September to approve the increases. Union leaders and local governments have for months warned the rate hikes could lead to layoffs and property tax increases.

“Much of the positive work the legislature has done to stabilize property taxes over the last several years is going to be marginalized if nothing is done to address this massive cost increase in local government health care insurance,” NJ State AFL-CIO President Charles Wowkanech said in a statement. “It’s not often that unions and local government management see eye-to-eye on an issue, but on this issue we are unified.”

A coalition of labor representatives and local government leaders on Monday unveiled a policy proposal that includes cost-saving measures and a one-time appropriation of $350 million to help offset the increases on local governments and their employees.

Millstone Borough Mayor Raymond Heck on Monday urged the Murphy administration and state lawmakers to “consider and advance this solution to benefit our public servants and our property taxpayers.”

“Today we have an unprecedented coalition, representing both labor and management, speaking with one voice and offering a solution to an unprecedented and devastating increase in health care contribution for local governments, local employees and property taxpayers.” said Heck, who is also president of the New Jersey League of Municipalities.

The $350 million would be appropriated from the state’s general fund to the Division of Local Government Services under the proposal, which the leaders said would guarantee annual savings of at least $100 million beginning in plan year 2024.

Those savings, according to the proposal, would come through measures to reduce the costs of the local government part of the state health benefits plan, including prescription drugs, without shifting costs to employees or employers.

The plan would empower the New Jersey state treasurer to implement the cost savings unilaterally if they do not materialize through state’s normal plan design process.

“This unprecedented coalition between management and labor is offering common sense solutions to avert tremendously negative consequences on taxpayers and public workers,” said Steve Tully, executive director of the American Federation of State, County and Municipal Employees Council 63.

“These recommendations provide adequate funding to local governments to offset the drastic premium increases for public employees while also addressing the factors that continue to drive health care costs higher,” Tully said. “This is a fair solution for taxpayers, local governments and public employees.”

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Derek Hall may be reached at [email protected]. Follow him on Twitter @dereknhall.