On Monday, April 21, 2025, union members hold signs at a rally at the Statehouse annex in Trenton, New Jersey. The unions that represent about 75,000 public sector employees in New Jersey seek action and legislation to guarantee access to affordable healthcare as well as better transparency and governance of the state’s public sector workforce.For NJ Advance, Dave Hernandez
A proposal to lower New Jersey’s physician and hospital payment rates for the upcoming year was rejected Wednesday by a state commission that manages health insurance coverage for hundreds of thousands of state employees.
To combat the growing expenses of healthcare, the union leaders sought to compel the state to renegotiate care prices with hospitals and other healthcare providers.
Union representatives demanded that their members not be forced to pay more for coverage under the State Health Benefits Program, given that double-digit insurance premium hikes are anticipated for the fourth consecutive year and that Governor Phil Murphy demands $100 million in savings from the plan by the end of 2025.
The majority of medical reimbursements to health care providers would have been restricted at double the amount Medicare pays for treating individuals 65 and older, according to a resolution presented by union members to the program’s Design Plan Committee at its monthly meeting. According to a 2021 analysis by the independent, nonpartisan research group Rand, physicians and hospitals that serve state employees sometimes charge three times what the Medicare program reimburses.
According to Kevin Lyons, a PBA spokesperson, this reference-based pricing strategy has the potential to save up to $500 million annually.
The six union members who voted yes were nullified by Murphy’s six appointees on the committee voting nay. The measure was unsuccessful.
Andrea Spalla, the assistant state treasurer, voted against the proposal, stating that it was much above the committee’s legal jurisdiction. She said hospitals and doctors would sue the state if they didn’t leave. The care of thousands of people would be disrupted by the sudden change.
According to Spalla, patients would have to wait longer for appointments and surgeries, and there would be fewer doctors available.
According to Lyons, circumventing contract negotiations is also illegal.
After the vote, Lyons stated that the state’s choice was obviously made to benefit its hospital and carrier companies rather than the citizens of New Jersey.
Lyons predicted that Murphy’s decision, supported by Assembly Speaker Craig Coughlin, D-Middlesex, and state Senate President Nick Scutari, D-Union, will ultimately result in higher insurance costs for workers.
Steven Tully, executive director for Council 63 of the American Federation of State, County, and Municipal Employees, stated that we must overhaul the racket that exists between hospitals and insurance companies.
“We have previously requested this proposal, but each time management votes against it,” Tully stated. What remedies do you have?
It is projected that next year’s state health benefits package for state employees would cost $2.9 billion. The governor and legislative leaders’ decision to remove $100 million from the program by the end of the year is unclear.
However, as the state’s three top elected officials gathered in secret on Monday to negotiate the $58.1 billion state budget for the fiscal year that starts on July 1, snatching savings from the program turned into a last-minute bone of dispute. Sometime this week, lawmakers are anticipated to present their version of Murphy’s budget.
In 2023, New Jersey’s public worker coverage cost $22,000 annually, according to a recent state Treasury Department report that demanded significant changes to the plan to save money. That is 60% greater than the national average for both public and private sector programs.
