Sweeney, NJEA agree to $1B in cuts in health benefit costs: Here are the details and reactions

By Tom Bergeron
New Jersey | Mar 9, 2020 at 1:13 pm

In what could be a turning point in the long-running battle over health benefit costs for state workers, State Senate President Steve Sweeney and NJEA President Marie Blistan said they have come to an agreement that will overhaul health benefits for school employees, potentially creating more than $1 billion in savings.

The long-time rivals announced the deal Monday morning. Terms of the deal were first reported by NJ Advance Media.

Under the terms of the agreement, the state would eliminate some existing health care plans available to teachers and introduce two lower-cost alternatives. Doing so will reduce the cost for taxpayers and lower premiums for teachers. New hires will have to enroll in one of the new plans.

The proposal could save the state $1.05 billion: $650 million by lowering costs for districts and the state and $400 million in savings for employees.

Senate officials told NJ Advance Media that they hope to put reform legislation on the governor’s desk by the end of the month.

The agreement was hailed as a major victory by both Sweeney and Blistan.

“This agreement is a win-win,” Sweeney said at the press conference. “This is a pretty huge announcement today that we’re coming up with over a billion dollars in savings. This has been a long, long journey.”

Blistan agreed.

“This has been the culmination with a very long process,” she said. “It wasn’t easy, but the work we’ve done has been a major victory. With this agreement, we are restoring economic stability to this great profession.

“We are looking forward to working with Senate President Sweeney.”

The agreement does not impact the MWA, which is the other large union representing state employees.

The agreement was lauded by the leaders of the state’s top business associations and economic think tanks. Here are their responses:

New Jersey Chamber of Commerce CEO Tom Bracken:

“This lowers the cost of health care, which then provides tax relief to the state and the municipalities,” he said. “Anytime you can reduce costs and anytime the NJEA is willing to give, I think that’s great because we all know that’s the 800-pound gorilla that’s holding back a lot. So, it’s a great step forward and both sides should be applauded for this.”

New Jersey Business & Industry Association CEO Michele Siekerka:

“NJBIA was pleased by today’s announcement of structural reforms to reduce the cost of our public employees’ health benefits, as we have long called for such reforms for the good of New Jersey’s economy and affordability,” she said.

“NJBIA has held firm in our position that there be no new or added taxes as part of the FY2021 budget, due to a current budget surplus built on the backs of business and the added obligations it will bring to our already overburdened residents and businesses. Should the savings announced today come to fruition, it serves as even more justification that there be no new taxes to the FY2021 budget.”

New Jersey Policy Perspective President Brandon McKoy:

“We applaud the leadership of the senate president and the NJEA for sitting down and reaching an agreement that works for everyone,” he said. “While we await the details of both the projected savings and two new health care plans — particularly considering new hires must pick one of them — the most important thing here is that these changes have been negotiated rather than mandated, respecting the value of collective bargaining and ensuring middle-class workers have a seat at the table in decisions that impact their health.”

Garden State Initiative President Regina Egea:

“We’re very glad to see progress and, as always, the detail beneath the press release is what matters to genuinely improving New Jersey’s affordability,” she said.

Both Bracken and Egea said they wanted to see more of the agreement before declaring a total victory for the state.

Said Bracken: “I think it’s a huge deal, but, like with everything else, what it means and what it leads to, can be different. As always, the devil is in the details.

“This sounds like this has the potential to be very beneficial, but there could be side agreements that take away from this that we don’t know what they are. But, directionally, this sounds great.”

Egea asked questions about the savings.

“Will employers still re-coup at least the 21% of their costs from the premium share?” she asked. “Will at least some percentage of these savings be mandated to pass thru to taxpayers?  If not, why not?”

Those questions and concerns are for another day. On Monday, both Sweeney and Blistan said they were glad to have gotten past their stalemate.