NJ Calls for Cut to Public Employee Health Benefits

August 10, 2006 (PLANSPONSOR.com) - A state cost-cutting plan for New Jersey includes higher health care copays and prescription drug costs for teachers and government workers.

The Newark Star-Ledger reports that the proposal by the state Division of Pension and Benefits calls for worker copays for doctor’s office visits to double to $10 and prescription drug costs to rise from $5 to $15, effective January 1.

Effective October 1, the new plan would require retirees and active employees in the health benefits program to purchase generic rather than brand-name prescriptions in most cases, or pay the difference themselves. The new plan would also require mail-order prescription services.

Union representatives said the current benefits are called for by the workers’ contracts and the changes would be more appropriate as a subject of contract negotiations, according to the Star-Ledger.

While unions expressed concerns over the proposal, Susan Marsh, vice president and consulting actuary at Aon Consulting, said New Jersey’s benefits were very rich compared to other states and other employers within the state.

This year, the state budget includes $2.1 billion for the health program payments, while local governments pay about $1.8 billion more, according to the news report. Fred Beaver, director of the state Division of Pensions and Benefits, told a legislative committee that without changes, the state’s portion would rise to $3.6 billion by 2010. Including pension contributions, the entire state bill for benefits will rise to $6.3 billion by 2010, nearly twice current costs.