N.J. public employee unions irked by Christie call to cut health benefits

Samantha Marcus

02/28/2016

TRENTON — Gov. Chris Christie's state budget address came with a public challenge to cut $250 million from state employees' health benefits.

Without those savings, he warned, New Jersey would struggle to afford a record $1.86 billion public worker pension payment and "protect valuable priorities for the rest of our citizens." The bill for providing health care to active and retired public workers would otherwise rise by hundreds of millions of dollars.

But public employee union members of the two committees that design health care plans for government workers say they view Christie's call as a threat – and point out that he has no power to order the changes.

Instead, they say Christie will use this to blame them if he cuts back the pension payments. They said they've been looking for cost savings since the committees' inception.

"This is a publicity stunt to get out of making a pension payment," said Kevin Lyons, a retired police officer who sits on the union side of the committee for state workers. "He's going to leverage his $1.9 billion pension payment on this $250 million. If we come up with the $250 million, he's still not going to make the payment. If we don't come up with the $250 million, he's going to blame us anyway."

Tackling the rapid growth in health care costs is a top concern for the administration, Christie spokesman Kevin Roberts said.

Nearly 10 percent of Christie's $34.8 billion proposed budget pays for health benefits for active and retired state workers and retired teachers. The administration estimates health care costs could crack $6 billion a year by 2024.

"There is an urgent need to bring these benefits into balance to make them fair and affordable," Roberts said. "The math speaks for itself as to the skyrocketing cost of this to taxpayers."

The governor is backing a sweeping overhaul of health benefits to save $2 billion a year. But that plan hasn't gained traction in the Legislature, and Christie said in his budget address he's "not willing to let gridlock and politics stop our progress on this issue." In the meantime, he would seek $250 million in state savings that would translate to another $200 million in reduced costs for local governments.

"We can't afford stalled progress any longer at the expense of our taxpayers and those who rely on state safety net programs," Roberts said.

Christie suggested "reasonable reforms," like requiring generic drugs, "modest" copay increases and "establishing new delivery methods for primary care services."

Finding those savings falls to the State Health Benefits Program Plan Design Committee, the 12-person panel that figures out health care plans for state government workers, and the School Employees' Health Benefits Program Plan Design Committee, the six-member panel that establishes benefits for school retirees. 

The panels — whose members are split evenly between union and Christie administration representatives — were created as part of the 2011 pension and health care reform law that hiked employee contributions up to 35 percent of the premium, depending on a worker's salary.

Though Christie's proposed budget assumes this $250 million in savings, the union members are quick to point out the health benefits committees are autonomous, and Christie's authority is limited to the votes of the management members.

"We don't work for him," said Hetty Rosenstein, area director of the Communications Workers of America and a state workers'  committee member.

"If you had called me before the budget and said 'Are the unions interested in figuring out ways to reduce the cost of health care in the state of New Jersey,' I would say yeah, of course we are," she said. "Do I think the governor gets to drop in the laps of the plan design committee a 7 percent cut in the cost of health care? No. I don't think he has the authority to do that."

Under state law, the committee has sole discretion over changes to employee health plans, she said. The committee's independence was affirmed by a 2014 state appeals court ruling that said the administration overstepped when it raised retiree prescription drug copays in 2013 without consent from at least seven committee members.

Spokespeople for administration officials on the committee did not respond for requests for comment or deferred comment to the governor's office.

David Jones, a retired president of the State Troopers Fraternal Association and health benefits committee member, said trying to identify savings and build the best plans for the lowest cost is part of their charter, with or without instructions from the governor.

"As it relates to me, it's not going to change a thing." Jones said.

The average teacher enrolled in one School Employees' Health Benefits Program plan makes $69,000 and pays $6,193 a year for family coverage, 19 percent of the premium and 9 percent of their salary, said Wendell Steinhauer, president of the New Jersey Education Association and a member of the school employees' committee. They're motivated to save money because it also lowers the cost of employees' premiums, he added.

Jointly, the union and administration members have made changes reducing the cost of health care by hundreds of millions of dollars, members said. The administration estimated in its proposed budget that the committees' work already saved the state $197 million next year.

The committees have slashed reimbursements for chiropractors who are not part of an insurance network, raised copays on emergency room visits, limited payments to out-of-network acupuncturists, restructured prescription cost sharing between employers and retirees and "aggressively" cracked down on the exploding pricetags for compound medications, Lyons said.

They also agreed to participate in a direct primary care medical home pilot program that pays doctors a fixed salary and a bonus for good clinical outcomes and patient satisfaction, in place of the "fee for service" model in which doctors have incentives to treat as many patients as possible.

Labor leaders said the problem is much bigger than employee health benefits: New Jersey is one of the most expensive health care markets in the U.S.

"It is not that we have a gold-plated or platinum plated health plan. It's not that the plan design is that rich or that out of control. That's not the problem," said Rosenstein. "The issue is the cost of health care."

But Roberts, Christie's spokesman, said the administration didn't label the plans platinum; it's an Affordable Care Act designation.

"The problem in New Jersey is not simply rising health costs. It is absolutely the wildly out of balance and overly rich level of benefits ... and it comes at the expense of taxpayers," he said.