NJ civil servant bonus hikes, Murphy’s deal with unions will cost taxpayers. The leaders are confused.

Recently approved rate hikes on health care premiums for New Jersey public workers are hitting cities and counties at a difficult time, and Gov. Phil Murphy’s handling of the process has left union officials and community leaders angry and bewildered local governments.

Premium rates for state health benefit plans are set to rise more than 20% in 2023 after a state board of health, chaired by New Jersey Treasurer Elizabeth Muoio, voted 3- 2 in September to approve the increases.

Murphy has reached an agreement with several state labor unions to mitigate their costs, angering local leaders and unions representing city and county workers who are warning of higher property taxes and layoffs .

Ultimately, New Jersey taxpayers will bear the lion’s share of rising costs, but exactly how much remains a mystery. The Murphy administration did not provide an exact amount and did not respond to questions from legislative officials during budget negotiations.

The governor had indications as early as February that this year’s rate hikes would be much higher than normal, according to the Governor’s Proposed Spending Plan and an analysis by the nonpartisan Office of State Legislative Services.

Murphy’s budget proposal for the current year, unveiled in early March, included $3.68 billion to cover the state’s share of health care premiums for active and retired public employees. It was $459 million, or about 14%, more than the previous year. By the time Murphy signed the budget in June, the amount had grown to $3.79 billion.

Since civil servants pay a percentage of total bonuses (based on salary-related sliding scales), their costs would also increase if the state paid significantly more.

Murphy boasted that health care costs were virtually unchanged in last year’s budget. It said in its 2021 Budget in Brief that it was an achievement “achieved through collaboration with stakeholders, initiatives to prevent over-billing, and greater oversight by our suppliers”.

This year’s budget message made no mention of higher costs.

The administration released no details of the substantial rise in health care costs until a copy of the rate increases was leaked in July, blinding union officials, state lawmakers and city leaders. local governments.

The Murphy administration says it handled the rate-setting process this year the same way it has in previous years, which includes not sharing information with local governments or the legislature. as long as the new tariffs are not already finalized.

And administration officials say by February they had a mid-year report that provided only part of the data needed to determine new premium rates for 2023.

“The information in this report is a ‘record’ that reflects a specific moment,” Treasury spokeswoman Danielle Currie told NJ Advance Media. “It doesn’t project rates.”

But state lawmakers say they’ve been left in the dark, and House Budget Committee Chair Eliana Pintor Marin, D-Essex, recently said she believes the administration was dishonest in the budget negotiations in the spring.

State Sen. Paul Sarlo, D-Bergen, chairman of the Senate Budget Committee, told a hearing Thursday that the committee was not “aware or informed of the potential increase in health care costs health”.

And the Legislative Services Office, a branch of the legislature that carefully monitors budgets, took note of the potential increase in public servants as soon as the budget was first proposed. The administration did not respond to questions from the OLS about the significant increase, according to a May report.

“Over the past two months, the Executive has not responded to repeated requests for additional information, nor made any report or public statement, on the causes of the increase in claims, particularly for active employees. state and higher education institutions,” OLS said in a budget analysis published in May.

The increase was most pronounced in health benefit costs for active state employees, which rose more than 20% from a year earlier to about $1.7 billion, according to the report. ‘OLS.

Shortly after rate increases were approved in September, Murphy reached a deal with state employees that will limit their dues increase to 3%, shifting the lion’s share of that burden to New York taxpayers. Jersey.

So far, this agreement has not been extended to local governments and is expected to benefit a small portion – less than 100,000 – of the more than 800,000 public sector employees covered by New Jersey’s health benefit program.

As part of the compromise, the state employee co-pay for specialists will double from $15 to $30 and the co-pay for emergency care will increase from $15 to $45.

At a news conference last week, New Jersey Counties Association executive director John Donnadio said higher co-payments would save “maybe a percent or two.” .

“The vast reduction for state employees was because the state is now absorbing the cost,” Donnadio said.

The state Treasury Department hasn’t provided an estimate of what the deal will cost taxpayers, and it’s unclear whether a cost analysis has already been done before Murphy agrees to the deal. ‘OK.

Currie said any cost increases won’t affect state finances until fiscal year 2024, which begins next July, and the budget impact will “depend on the outcome of next spring’s contract negotiations” with unions. .

Local governments are still facing a 22.8% rate increase, which could lead to higher property taxes. Cities and counties participating in the state health benefit program have asked Murphy to provide immediate relief on par with the agreement with state employees.

Over the past four months, Murphy has repeatedly said rate increases are largely stereotypical and a problem facing states across the country, but federal data and estimates on employee-sponsored plans for 2023 paint a different picture.

A post-pandemic surge in demand for health services and record inflation are the two main forces behind the massive increases, according to Aon, the risk management firm the Murphy administration hired to carry out the analysis of this year’s rates.

But in a independent report published in August, the same company said the average costs for U.S. employers paying for employee health benefits will increase by 6.5%. That’s more than double the 3% increase U.S. employers saw from 2021 to 2022, Aon said in its report, but significantly below inflation.

“In stark contrast over the past few decades, we measure that health care budgets for U.S. employers will be nearly three times lower than the Consumer Price Index this calendar year,” Debbie Ashford, chief actuary of the health solutions for North America at Aon, said in a statement announcing the company’s findings.

Health care premiums for federal employees and retirees will increase 8.7% average in 2023, according to the US Office of Personnel Management.

Premium increases for public worker health benefits in New Jersey are more than twice the rate of inflation and, in some cases, three times the increases seen in other states.

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Derek Room can be attached to [email protected]. Follow him on Twitter @dereknhall.

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