Audit Finds N.J. State Health Plan Cheaper for Localities
The report from the New Jersey State Comptroller found the 14 counties and 217 municipalities not in the State Health Benefits Plan rely on pricy brokers or haven’t fully evaluated the costs and benefits of the state plan, the Insurance Journal reports. Broker fees are not incurred by counties and towns that participate in the state plan.
The report looked at four government units outside the state plan — Essex County and the townships of Brick, East Brunswick and Haddon — and found that they could have saved about $1,000 per employee per year, about $12.5 million collectively over two years, if employees were insured through the state plan. If all local governments made the switch from private carriers to the state plan, more than $100 million could be saved on taxpayers’ behalf, the audit estimated.
According to the Insurance Journal, the state plan offers medical, prescription and dental coverage options to more than 850,000 participants, including employees, retirees and dependents. Seven of the state’s 21 counties and 349 (62%) of its 566 municipalities were in the state plan as of last April, according to information from the Department of Pension and Benefits.
In their responses to the audit, the government bodies said union contracts prevent them from switching to the state plan, which offers higher co-pays. One local governing body also expressed concern about the financial stability of the deeply indebted state plan.
The Comptroller’s office also contacted four municipalities that recently switched from private insurance to the state plan. All four reported that their premiums decreased under the state plan. The news report said one township reported that it was able to hire seven additional police officers and avoid planned layoffs that would have been necessary had the township not made the switch.