Local governments poised to save as co-pays rise
Thursday, September 7, 2006

By MONSY ALVARADO
STAFF WRITER

School districts and municipalities will save millions of dollars now that many teachers, police officers and other local government employees will have to dig deeper into their pockets for doctor visits and prescriptions, lawmakers say.

Municipal and school employees enrolled in certain state health insurance plans will pay $10 per doctor visit come Jan. 1 -- a $5 increase. A 30-day supply of prescription drugs will cost $3 for generic drugs and $10 for brand names. Local public employees pay $1 for generic and $5 for brand names now.

Labor unions have opposed the change to the benefit program and are investigating whether they can legally challenge the increases.

The State Health Benefits Commission, which voted on the co-payment increases this week, said that the move would save municipalities and school districts $32 million. It will also require local employees to pay the same co-pays state employees have been dishing out for the past two years.

"It creates uniformity within the plan, so that you have people paying the same thing,'' said Mark Perkiss, spokesman for the state Treasury Department. "Because most everybody has the same co-pays, you don't have differences at the state level versus the local level."

The state's labor unions that represent public workers have been vocal on retaining current health benefits. Steve Baker, spokesman for the New Jersey Education Association, said that the move undermines the collective bargaining process.

"We don't believe that the state should come in and unilaterally change the terms of a negotiated contract," Baker said. "We are looking into what options our members have, whether they can file unfair labor practices."

The changes would apply to members of the NJ Plus and HMO plans of the State Health Benefits Program. The new doctor visit co-pay will affect 223,737 local employees and their dependents, while the increase in drug prescription co-pays will affect 85,978 employees and their dependents, Perkiss said.

But some school officials said the state's health benefits program still needs a major overhaul.

Frank Belluscio, spokesman for the New Jersey School Boards Association, said individual school boards should have flexibility to negotiate even higher co-pays to save more money. The state benefits program sets the costs.

"This is a financial decision by the state program. It is more aligned with what you see in the private sector and it really comes down to a financial decision for the program," Baker said.

Health benefits and other public employee compensation have been a topic of debate and have been under intense scrutiny by Governor Corzine and other elected officials.

The Record's "Runaway Pay" series, published in July, found that public employee unions, particularly for police and teachers, have managed to push compensation for their members to record levels, even as private sector employees are facing cutbacks and increasing health care costs. The Record found that in New Jersey's public sector, nearly 78,000 employees of the state government and state college system enjoy free medical coverage for themselves and their families. More than 125,000 local employees also get free health benefits under the state Health Benefits Program, with only a few kicking in toward family coverage.

During negotiations, municipal governments and local school districts have a hard time winning even the smallest concessions on health benefits, because of strong unions, tough bargaining rules and rigid state guidelines about employee contributions.

Employee health-benefit expenses are a major and rising cost for New Jersey. In 2005, the state government spent $1.9 billion on employees and retirees enrolled in New Jersey's state plan; local governments spent $1.2 billion.

A task force commissioned last year by state Sen. Richard J. Codey, when he was acting governor, found that state and local governments could save $350 million annually if they paid 95 percent of employee premiums, rather than the full cost for the popular NJ PLUS plan.

The task force suggested that public employees and retirees pay more for their health care. To reduce the high costs of prescription drugs, the eight-member panel recommended the state give preference to generic drugs and rely on mail order for prescriptions.

On Tuesday, the State Health Benefits Commission postponed a vote that would have directed state and local workers to use generic drugs and mail-order pharmacies, for a savings of $34 million. Commission members decided to start a public education campaign on those changes before taking a vote.

The increase in co-pays was good news for some local officials.

"If that's true, I welcome the change," said Paramus Mayor James Tedesco, whose borough employees are enrolled in the state health plan.

Daniel Kirsch, a Hackensack board member who has been involved in teacher contract negotiations, said he was cautiously optimistic that the school district will see savings.

"I hope that this means that the insurance companies will in fact reduce the premiums that we pay," he said.

Fran Borg, president of the Hackensack Education Association, said no one likes increases.

"Prices go up, things go up," she said. "We have to be realistic also. The prices of medicine and doctor's visits go up."