NJ Teachers Closer to Seeing Concessions on How They Contribute to Health-Care Costs

John Reitmeyer | March 10, 2020 | Budget
Senate president and head of state’s largest teachers union craft plan that would ease financial burdens on educators and local school districts
Credit: NJTV News
Senate President Steve Sweeney and NJEA president Marie Blistan

New Jersey teachers appear to be poised to win a long-sought concession from the state that would significantly change the way they contribute to their health-insurance costs.

The framework of a deal that would revamp both health-insurance contribution policies and types of plans offered to teachers was announced on Monday by Senate President Steve Sweeney (D-Gloucester) and Marie Blistan, the president of the powerful New Jersey Education Association.

The deal would allow teachers to make contributions toward their health-care coverage as a percentage of their salaries instead of as a share of their premiums, starting later this year. At the same time, the NJEA, the state’s largest teachers union, is backing proposed changes to health-insurance plans that are aimed at cutting overall costs for both educators and local school districts, which generate most of their funding from property taxes.

Getting off the path

Sweeney and Blistan touted the agreement as a “win-win” and a major breakthrough. Up until recently, the two parties had been feuding bitterly, particularly after Sweeney backed more drastic changes to public-worker health-insurance and pension benefits under a proposal known as the “Path to Progress.”

The full details of the agreement were not disclosed publicly on Monday, nor were drafts of any proposed legislation or actuarial projections. But Sweeney touted the potential for as much as $670 million in annual savings for local school districts, and as much as $400 million in annual savings for teachers.

“I’m proud that we’re able to do this,” he said.

“With this agreement, we are restoring economic stability to this great profession and we are removing one of the greatest obstacles to keeping our great public schools the very best in the nation,” added Blistan.

The state shifted to making public employees cover a share of their health-care premiums as part of a broader benefits-reform law known as Chapter 78 that was enacted in 2011 by former Republican Gov. Chris Christie with support from Sweeney.

‘Skin in the game’

That law — which also increased worker pension-contribution rates, among other changes — sought to give teachers and other workers a bigger incentive to control rising health-care costs by giving them more “skin in the game.” To accomplish that goal — and to also hold down taxpayer exposure to rising health-care costs — employees were forced to pay up to 35% of their premiums. Once fully phased in, the policy change helped move public employees in New Jersey high up the list of those contributing the most toward their health-insurance costs across the nation.

But teachers have for years called the Chapter 78 health-care contribution requirements onerous, and have also suggested they’ve been leading many to pursue other careers.

“Our members no longer need to fear that their take-home pay will decrease year-after-year as a result of those imposed contributions,” Blistan said on Monday, while announcing the deal with Sweeney.

“It is another example of the kind of win-win solutions we can achieve when we come together determined to make progress,” she said.

Yet for Sweeney, the deal marks something of a retreat since he had previously been calling for a shift of all employees from what are known as platinum-grade health-care plans, where they contribute no more than 10% of the overall cost of their coverage, to gold-level plans, where they contribute no more than 20%. That had been a key element of the broader Path to Progress government-reform package that Sweeney and a group of fiscal-policy experts unveiled in 2018.

During Monday’s announcement, Sweeney touted the potential for savings that would be derived largely from offering a proposed “New Jersey Educators Health Plan” option that would offer enrollees relief from Chapter 78 in exchange for a series of undisclosed plan-design changes that would be aimed at reducing overall costs. But the new plan would remain platinum-grade health insurance, he said. Still, if Sweeney’s estimates hold firm, the savings could rival those that could have been achieved for teacher health care through Path to Progress. It should also ease pressure on the nearly $16 billion that is raised each year through property taxes to help fund K-12 schools — all at a time when property-tax bills are running at an all-time high in New Jersey.

“This agreement is a win-win for New Jersey taxpayers and educators,” Sweeney said.

Taking a close look at plan

The Senate president’s acquiescence comes after Assembly Speaker Craig Coughlin (D-Middlesex) had already signed on to legislation that identified some $300 million in potential annual savings for school districts while also seeking to ease the Chapter 78 contribution burden for teachers. In a statement issued on Monday, Coughlin committed to conducting a thorough review of the proposed changes that Sweeney and Blistan have agreed to.

“I am confident that today marks yet another important step in my efforts to create long-term fiscal savings for New Jersey’s taxpayers,” Coughlin said.

Meanwhile, Murphy press secretary Alyana Alfaro said the governor has also long supported a more collaborative approach between management and workers as being the “best strategy for reducing health-care costs without sacrificing quality.”

“The governor looks forward to reviewing the proposal put forward today and working together to finally give our educators the long-overdue Chapter 78 relief they deserve,” Alfaro said.

In addition to creating the proposed New Jersey Educators Health Plan, Sweeney said he will also seek to create another health-insurance plan that would seek to generate more savings by restricting options for health-care services to “New Jersey-only health-care providers.” He’s also agreed to back other pieces of legislation sought by the NJEA.

It was just a few years ago that the NJEA spent millions of dollars trying to unseat Sweeney from his Senate seat, with Blistan personally accusing him of “serial dishonesty” and “frequent betrayals.” More recently, many union members came out en masse to challenge Sweeney as he held a series of town hall meetings to promote the proposed Path to Progress reforms.

It’s unclear right now how much the full Path to Progress reform agenda — which also proposed finding savings from pension-benefit reform and school consolidations — could be put on hold amid the détente.