The largest city in New Jersey has joined the growing list of municipalities that have abandoned the state health benefits plan in favour of a private insurer due to rising costs that officials have warned could wreak havoc on local governments and taxpayers.
According to Tiffany Stewart, Newark’s director of human resources, the city’s plan with its private insurer, Aetna, will take effect at the beginning of February. This means that over 8,000 current and former Newark public servants will no longer be covered by the state health insurance programme.
It comes after Trenton officials announced a few days ago that they had switched to Aetna to insure the city’s roughly 2,000 employees, a move the mayor has said will save taxpayers $4.3 million annually.
It would have cost Newark $87 million more to renew under the state health plan, says Stewart. It has estimated that working with Aenta will cost a total of $59–72 million.
After a vote in October, Camden switched to Aetna for its 1,000 or so employees at the start of the new year.
A spokesman for the city, Vincent Basara, said that the city expects to save $200,000 this year thanks to the switch, as opposed to taking a hit of more than $3 million had it remained on the state’s plan.
In September, the State Health Benefits Commission approved rate increases of over 20% for health plans covering over 800,000 state and local government employees.
This included a 22.8% rate increase on premiums for local and county governments, prompting a mass exodus.
The state’s employees will have less to worry about after Governor Phil Murphy reached an agreement with several unions.
However, several people familiar with the talks who spoke on the condition of anonymity said that the administration and lawmakers’ talks with local leaders have not resulted in a similar agreement and have stalled over the past week.
Those in charge of the area have expressed surprise at the drastic hike and have warned that it may lead to job cuts and higher property taxes if it is not offset. The New Jersey Association of Counties estimates that the total cost to local governments will exceed $350 million.
On Thursday, the governor’s office declined to comment, instead pointing to statements Murphy made the previous week in which he insisted negotiations have not stalled.
In spite of everything, I continue to believe in the best possible outcome. I’m sorry, but I have no idea when that will be. But there’s nothing but goodwill,” Murphy said when asked about it in a public setting.
Advocates for a swift negotiation warn that if many municipalities abandon the state health plan, the repercussions could be dramatic.
“What does that mean for the state plan next year and beyond if more and more employers look into this option and if they find a better alternative?”
League of American Cities Director Michael Cerra said. We need a solution as soon as possible because “each reduction in the pool is going to have implications on those who are left.
When will Newark leave? Nothing new there, as far as Cerra is concerned.
He explained that this was to be anticipated because “employers in the system are doing the due diligence and are going to do what’s in the best interest for their employees and their taxpayers.”