New Jersey’s public employee health plans are expected to face another year of double-digit increases, actuaries for the state said Monday.
Though representatives from Aon, the state’s actuary, did not give an exact figure for how high premiums under the public plan could rise, they warned premiums could require an increase of between 10% and 20% to keep the plans going.
“Your plan is running hot still, for lack of a better phrase,” Joe Tappe, a vice president at Aon, told the State Health Benefits Commission Monday.
The review was the latest in a series of grim pronouncements for New Jersey’s beleaguered public worker health plans.
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Treasury officials last year warned that the part of the State Health Benefit Program that covers local government workers was in a death spiral as escalating premiums force departures to cheaper options in the private market, forcing more rate hikes and, in turn, more departures.
The local part has taken loans from state workers’ better-funded health plan to remain solvent and sought to rebuild its long-depleted reserves by adding an additional charge to premiums. But those measures, along with the 37% premium increase approved for local government workers’ plan last year, were insufficient to stabilize it amid a new wave of departures, adding to governments like Newark that left years earlier.
The scale of the departures outpaced actuaries’ expectations, and though the local part’s revenue could enable it to repay loans to state workers’ plan, it would do little to fill the plan’s reserves, which are expected to hold a negative balance equal to about one-and-a-half months of claims.
“For comparison, our target is two months of plan costs, and in order to reach that, current premiums would have to be 26% higher than they are today,” Tappe said.
That would have meant a nearly 73% premium increase for local government workers in the current year.
Utilization remained high across all plans, and GLP-1 weight loss drugs that have been a major cost driver for health plans across the country continue to weigh on New Jersey’s plans for public workers.
A move to shift government workers to less expensive public worker health plans did slow cost growth, but it wasn’t enough to reduce expenses overall, Tappe said. Workers are responsible for a greater share of costs associated with a health care visit under those plans but pay lower premiums in return.
Utilization on the slimmer plans remained high, and the cost of health care services continued to grow apace. The revenue collected from plans’ lower premiums was not enough to outweigh the cost of claims under the local part, Tappe said.
“You’ve got migration into the tiered network and union plans, which are lower cost plans. Even with that migration, trends are still running really high,” he said. “Another way to think about that is if we didn’t have that migration, the trends would have been even higher.”
The warnings delivered for public worker health plans Monday mirror ones given to the School Employees Health Benefit Commission last week.
The plan for school workers is expected to lose 12% of its active enrollees in 2026. The departures have pushed both claims and premiums to fall, but the latter fell further. As a result, the school plan is expected to end the year with a negative balance in its reserves and face double-digit premium hikes.
The analyses delivered this month are meant to give the bodies that oversee public worker health plans a preview of the year ahead. Actuaries are expected to deliver more final forecasts for the public plans this July ahead of rate-setting votes in August or September.
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