Last Friday, Senate President Steve Sweeney announced that he intends to introduce legislation to merge the School Employees Health Benefits Plan (SEHBP) with the State Health Benefits Plan (SHBP), a proposal that could potentially save school districts and their employees millions of dollars.
The announcement came during the New Jersey Principals and Supervisors Association’s annual Legislative Conference. Such legislation would be the first bill to codify one of the recommendations included in the New Jersey Economic and Fiscal Policy Workgroup’s “Path to Progress” report released last August. The report included a series of proposals aimed at improving the state’s fiscal condition.
The SEHBP was created under a 2007 law signed by then-Gov. Jon Corzine as part of an omnibus pension and health benefits reform measure. Prior to that, school districts had the ability to opt into the SHBP. Approximately 30 percent of New Jersey’s school districts currently obtain health care coverage for their employees through the program. Most other districts either self-insure, obtain coverage on the commercial market, or participate in a joint insurance fund.
Participation in the SEHBP has declined significantly over the last several years as premiums have increased substantially and districts have sought less expensive coverage outside of the plan. Medical and prescription drug coverage for a family plan under the SEHBP’s most popular option, Horizon DIRECT 10, currently carries an annual premium of $37,905. Conversely, the most popular SHBP plan, Horizon DIRECT 15, costs a little over $30,000. A new PPO plan that Gov. Murphy recently negotiated with the CWA, the largest state public employee union, will become available to state workers later this spring and cost even less than that.
“There’s no excuse for teachers and taxpayers to be paying $37,905 for a family plan under the School Employees Health Benefits Plan when state workers and taxpayers are saving money and getting superb coverage for just $27,269 under the new State Health Benefits Plan,” said Senator Sweeney in a press release issued Friday.
“While the state employee unions worked hard to find savings, the SEHBP has gotten so expensive that it has lost one-third of its members since 2014. Newark, Jersey City and Paterson all dropped out in the last year or so,” Sweeney said. “It makes no sense for a teacher making $75,000 to pay up to $8,718 for the premium on an SEHBP family plan when a state worker making the same amount only has to pay $5,438 in the SHBP. Teachers and taxpayers are both paying too much.”
As school districts continually struggle to cope with the rising cost of health care, which crowds out other spending priorities, the NJSBA believes that the proposal to merge the SEHBP and SHBP into one program is worthy of consideration.
The NJSBA supports the proposal’s goal of reducing overall costs while continuing to provide a level of benefits necessary to attract and retain high-quality staff. According to news reports, the non-partisan Office of Legislative Services is conducting an analysis on the financial savings that could be realized through the proposed merger. As more details emerge, NJSBA staff will analyze the proposal and offer feedback to the Legislature.
The Senate President also addressed another “Path to Progress” proposal regarding retiree medical costs that has garnered increased attention in recent weeks.
The Path to Progress initially suggested requiring all new state and local government employees to pay the same percentage of premium toward their health care that they paid while working. On Friday and at recent town halls, Senate President Sweeney publicly declared that this proposal would not be included in any legislative package to implement the report’s recommendations. The report has been updated to reflect his decision.