By Elizabeth Maher Muoio
Any question over whether you can achieve more through collaboration rather than confrontation was effectively laid to rest this week when Gov. Phil Murphy announced agreements with public employee representatives that will preserve the quality of health care benefits while delivering nearly half a billion dollars in savings over the next two years for the state, local governments, and plan members.
It's no secret that the previous administration preferred a confrontational approach to try and extract concessions from public employees. This tactic chased representatives away from the negotiating table, leaving taxpayers and public employees to foot the bill when premium rates continued to rise as a result.
Conversely, the Murphy administration has adopted a cooperative approach based on an underlying belief in the power of good faith negotiations.
As a result, we are going to see a dramatic reduction in health care costs that will produce substantial savings for taxpayers statewide, particularly property taxpayers through the savings that will be delivered to local governments.
The bulk of these savings will be realized through the adoption of Medicare Advantage for all retirees, producing $450 million dollars in savings for the state and local governments over the next two plan years. This shift will provide members with peace of mind in knowing they will receive the same quality level of services while achieving significant savings for the state by shifting a greater portion of the cost liability onto a third-party provider.
Two new plans will also be introduced for active school employees and early retirees, which will encourage the use of in-network primary and specialty care services by eliminating co-payments from members while lowering the cost to employers through out-of-network payment reforms and increased use of generic drugs.
Through other practical and efficient changes to the State Health Benefits Plan, such as the use of generic drugs and various out-of-network reforms, the state and local governments will also see tens of millions of dollars in savings without altering the quality of benefits.
Consequently, we are going to see significant decreases in health insurance rates rarely seen anywhere in the country.
Rates are expected to plummet by roughly 37 percent for both early retirees and Medicare retirees at the local government level next year. State government will also see substantial decreases as 2019 rates for active employees will be lower by 0.6 percent and rates for Medicare retirees will drop by 32.6 percent over last year.
Staff from the Governor's Office, the Treasurer's Office, and Treasury's Division of Pension and Benefits deserve tremendous credit for the countless hours they devoted to seeing these savings through to fruition. Guided by the governor's principle that we don't have to sacrifice quality in order to realize savings, we set out to find innovative ways to provide relief from rising health care costs.
Public employee representatives also deserve credit for coming to the table with an open mind and ideas of their own. This is a tremendous first step in the right direction and I know the Murphy administration is committed to working with our partners in labor to continue finding ways to provide health care in the most effective, comprehensive, and cost-efficient way possible.
The Health Benefits Quality and Value Task Force -- a group made up of administration officials, labor, local government representatives, and health policy experts un Murphy - is a key example of this new approach to problem solving. Last week we hosted the first of three listening sessions across the state to solicit valuable public input in this ongoing effort. We invite everyone with worthy ideas to attend the remaining listening sessions over the next two months.
This journey has just begun and if the past week has taught us anything, there is no shortage of good ideas when everyone is willing to come to the table.
Elizabeth Maher Muoio is New Jersey's state treasurer and a member of the governor's Health Benefits Quality and Value Task Force.
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