N.J. teachers, school districts could save $1B in health care costs under new law signed by Gov. Murphy

Gov. Phil Murphy on Wednesday signed a bill into law that overhauls health care benefits for teachers in New Jersey — a plan that proponents say will lower premium costs for educators and could save teachers, school districts, and the state an estimated $1 billion a year.

The law (S2273) pares down health care plans that teachers can choose from in the state’s School Employees’ Health Benefits Program to two of the most popular offerings while introducing two lower-cost plans.

Murphy has championed the measure as crucial as New Jersey continues to deal with the twin public-health and economic crises from the coronavirus outbreak. It also fulfills the Democrat’s campaign promise to bring health benefit relief to teachers.

“What I think we must take away from this day is that today New Jersey returned to one of the central tenants of our state, and that is collective bargaining,” Murphy said before signing the measure at Union High School in Union.

“Negotiation, as painful as it might be … will always get you more in the end,” he added. “We recommit to our educators that we will work with you, honestly and fairly.”

The law is the result of an unlikely compromise between state Senate President Stephen Sweeney, D-Gloucester, and the state’s largest teachers union, the New Jersey Education Association, who have often feuded with each other.

“This is really a big, important day,” Sweeney said at the bill signing. “Teachers are the cornerstones of our communities. We’ve gotten a lot done here.”

After months of negotiations, both houses of the New Jersey Legislature passed the bill Monday by overwhelming measures — 38-0 in the state Senate and 73-0 in the state Assembly.

“We got to work,” Assembly Speaker Craig Coughlin, D-Middlesex, said at the event. “This is a special day because of all of the hard work, because of the dedication and commitment to the understanding that we need to make some change ... and (that) we’re able to come together over the course of a couple of months.”

Sweeney’s office said the plan will save school districts $640 million a year, with another $404 million in savings for teachers and $30 million for the state. Still, actual savings will depend on how many teachers pick one of the less-generous plans.

The plan answers the NJEA’s call for relief from Chapter 78, a decade-old state law that required its members pay anywhere from 3% to 35% of health insurance premiums, depending on their salary and plan. Sweeney and then-Gov. Chris Christie, a Republican, helped usher in that 2011 law, and teachers have said they take home less money from their paychecks each year because of it.

“When every Republican in the Legislature and every Democrat in the Legislature and the governor of the state agree with the state’s largest public employee union on health care reform that protects high-quality benefits and saves everyone money, that may just be the most surprising political story of the year,” Marie Blistan, president of the NJEA, said in a statement. “But here we are, because that’s exactly what happened.”

If they choose one of the two new plans under the new law, teachers could save thousands of dollars a year in premium costs, according to state Senate Democrats.

Teachers will be allowed to chose between three plans beginning Jan. 1 — NJ Direct 10, NJ Direct 15, and the New Jersey Educators Health Plan. Those who enroll only in the new educators plan premiums would be based on percentage of their salary rather than a percentage of the entire plan cost.

The New Jersey Educators Health Plan shifts some out-of-network costs to teachers to encourage them to stay in-network and slashes reimbursements to out-of-network providers. It also includes mandatory generic prescription drugs and requires teachers to pick up the tab if they want name brand drugs.

Premiums in the new educators plan range from 1.7% for someone making $40,000 on a single plan to 7.2% for someone making more than $100,000 and enrolled in a family plan. A teacher earning $70,000 a year would pay 2.8% of their salary for an individual plan and 5.5% for a family, saving between $2,000 and $5,000 a year, according to Senate Democrats.

A fourth plan, the Garden State Health Plan would become available by July 2021. That would restrict enrollees to New Jersey health care providers and reward teachers with premiums that are half those of the educators plan.

New hires will be able to enroll in only one of the two new plans.

Districts that self insure or independently contract for health benefits would be required to offer comparable plans unless they already include low-cost options.

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Brent Johnson may be reached at bjohnson@njadvancemedia.com.

Matt Arco may be reached at marco@njadvancemedia.com.

Samantha Marcus may be reached at smarcus@njadvancemedia.com.

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