Gov. Phil Murphy announced on Sept. 17 that the administration had reached an agreement with the state’s public employee unions, including the New Jersey Education Association (NJEA), to make changes in employee health benefits plans for both active and retiree members.

The New Jersey School Boards Association has praised the agreement as a positive and meaningful first step toward controlling one of the fastest-rising costs in local school districts.

“NJSBA has been a leader in advocating strategies to control rising health benefit costs, which have a negative impact on resources available for education programming,” said Dr. Lawrence S. Feinsod, NJSBA executive director. “Yesterday’s agreement is a significant step toward this goal. We hope that the governor, the Legislature and the School Employees Health Benefits Program’s Plan Design Committee will take further action to address this issue.”

Governor Murphy on September 17 announced the changes, which are predicted to save state and local governments, including school districts, approximately $496 million—$274 million for the current fiscal year, and $222 million in 2019-2020. The reforms apply to the School Employees Health Benefits Program (SEHBP) and the State Health Benefits Program, which primarily covers state, county and municipal employees.

Advocating Reform NJSBA has a long history of advocating for the types of reforms reflected in the agreement.

For example, in August 2017, General Counsel Cynthia Jahn, who represents the Association on the School Employees Health Benefits Commission, made a motion to formally request that the SEHBP’s Plan Design Committee consider reforms already adopted by the state and municipal employee plan, including Medicare Advantage, limiting reimbursement for out-of-network services and mandating generic prescription drugs. The motion was unanimously approved by the five other members in attendance.

Under the September 17 agreement, the largest savings—$450 million over the next two years—will come from the adoption of the Medicare Advantage program for retirees from the State Health Benefits Program and the School Employees Health Benefits Program (SEHBP). Two new plans will also be introduced for active members of the SEHBP and those who retire early from the system. These plans will increase the use of generic drugs; focus on in-network, rather than out-of-network, care; and eliminate co-payments from members. If 10 percent of active employees migrate to the new plans, local school boards can expect to save $23 million in 2019, according to the governor.

The changes will also result in lower premiums for the 2019 plan year; with rates decreasing by 1.1 percent over last year—a dramatic change from the 13 percent increase the SEHBP experienced last year.

Commission to Vote on Reforms The reforms were approved on Monday through a vote on the Schools Employees’ Health Benefits Program Plan Design Committee. The SEHBP commission will meet Sept. 19, and is expected to approve the 2019 premiums for the SEHBP, which will reflect the plan design changes announced by the governor.

Financial Relief “While the bulk of the savings from these reforms will go to state coffers, additional savings can be realized at the local level that will enable school districts to invest in educational programming and services while providing financial relief to employees and taxpayers,” said Feinsod. “NJSBA looks forward to collaborating with all stakeholders to achieve these goals.”

Governor Murphy has convened the State Health Benefits Quality and Value Task Force, which will be meeting again this week, as well as hosting its first public listening session in Hamilton on Thursday, Sept. 20. Jonathan Pushman, NJSBA legislative advocate, is a member of the task force.

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