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N.J. pension director says insurance premiums could rise by double digits
by Chris Megerian/Statehouse Bureau
Wednesday June 10, 2009, 4:10 PM
TRENTON -- State pension director Fred Beaver continued to deliver bad news about health care coverage today, saying insurance premiums for public employees could rise by double digits next year.
The increase is likely to strain budgets for cash-strapped counties, municipalities and local agencies that are enrolled in the state health care program.
Full Star-Ledger coverage of the N.J. budget
"It's not good news," said William Dressel, executive director of the New Jersey State League of Municipalities. "This is an unanticipated increase at a time when budgets are already stressed."
Union contracts may prevent municipalities from passing the cost of the increase onto employees, meaning additional cuts or property tax increases will have to make up the difference, Dressel said.
"Those are the two options you want to avoid," he said. "Or possible layoffs."
On May 22, Gov. Jon Corzine ordered two state commissions that oversee health benefits for public employees to review possible ways to prevent "double-digit" increases in premiums. He suggested tighter controls on school districts and towns, such as preventing them from delaying payments and kicking those who fail to pay out of the program.
The following week, Beaver told the School Employees' Health Benefits Commission premiums for more than 250 districts could increase by as much as 20 percent.
Today he appeared before the State Health Benefits Commission to deliver a similar message, although he would not specify the exact increase.
Beaver said the new insurance rates will be presented to the two commissions next month and go into effect Jan. 1.
Almost 500,000 people -- state, local and retired employees and their dependents -- received health benefits from the state as of June 2007. Nearly 300,000 current and former school employees and their dependents are enrolled in a separate state program for school districts, created last year.
The New Jersey School Boards Association expressed concern about the increase, saying it will present "severe budgeting difficulties." Spokesman Frank Belluscio said the association is developing suggestions for mitigating the added cost.
Premium increases have previously been kept in the single digits by using funds reserved for paying larger-than-expected insurance claims.
Last year, the state used $45 million to reduce premiums for school districts and $28 million for other public employers, Treasury spokesman Tom Vincz said.
Dressel said local leaders are re-examining private insurance providers, which have generally been more expensive than the state program.
"Traditionally, they may not have even considered it," he said.
Linden Mayor Richard Gerbounka said health care for 525 full-time employees and their dependents costs the city $10 million a year. Since union contracts expired in December, he's hoping the city can strike a deal where workers help cover a portion of their premiums.
Lambertville Mayor David Del Vecchio said the city has about 30 employees in the state benefits program, and he doubts they could get a better deal on health care through the private sector.
"Hopefully we'll find a way to deal with (the increase) where it won't go on the backs of taxpayers," he said.
Previous coverage
May 22 -- Corzine orders review of public employee health insurance plans to stem rising costs
May 21 -- N.J. Assembly approves bill expanding health insurance for autism treatments
May 7 -- Number of uninsured children still high, despite N.J. health program
April 12 -- Two N.J. lawmakers play key role in drafting new health insurance law
April 7 -- Report finds health insurance gap in N.J.
Feb. 12 -- State health insurance audit echoes private sector trends
Sept. 30, 2008 -- Report: Scaled back health plan for N.J. teachers will cost $59.7B
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