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Rising inflation and a sharp rise in health care utilization are behind a proposed double-digit increase in health insurance premiums for public employees, with state and local officials worried about the impact on workers and taxpayers, officials said Thursday.

Speaking to the state Health Benefits Plan Design Committee, which oversees health plans for public workers, officials at Aon Hewitt — the health plans’ actuary — said a recovery in health visits in 2021 was the primary reason for the proposed increases. The visits doubled or, in some cases, tripled expectations set in 2020, they said.

Becky Searles, senior vice president at Aon Hewitt, said actuaries had predicted claims would rise no more than 10% as the virus’ impact on health visits eased in 2021.

“We’re seeing much higher pullbacks, some services are up 20% to 30% over the course of 2020,” Searles said.

The pandemic appears to have driven many of the occupancy trends underlying the actuarial recommendations. Healthcare visits fell sharply in 2020 due to fears of COVID-19, then rebounded in 2021. But inflation is also playing a role: actuaries said premiums for public employees would need to rise by about a further 7.6% to reflect rising prices.

State actuaries have recommended increasing state bonuses for active state employees by 20% to reflect trends in the 2023 plan year. Active local government workers should see a 21.6% increase, while early retirees should see a roughly 13% increase, they said.

Suggested increases for some workers may be higher or lower depending on their specific health plan, but in any case they far exceed typical rate increases, which rarely exceed 5%.

The recommendations have sparked a bipartisan firestorm in New Jersey as lawmakers rush to urge the state Health Benefits Commission to stave off the increases. Republicans want a committee to review proposed rate hikes, while Democrats have proposed putting local government officials on the board that sets target rates.

“The rate hike proposal is very worrying and not only raises a number of questions but also underscores the need for greater transparency,” Senator Shirley Turner (D-Mercer) said in a statement.

The commission has a short runway to finalize wage increases for the coming year as the registration period for local government employees wishing to enroll in a state plan begins in October. That means plan changes would likely need to be completed by mid-September.

Officials are unlikely to find a long-term solution to rising health care costs in this timeframe, although members of the Plan Design Committee have signaled they could try to take action to provide public workers with some short-term relief while they further examine more comprehensive reforms down the line.

The increases could also become leverage in negotiations with public unions. Collective bargaining changes could trigger contract provisions that allow unions to immediately renegotiate parts of their collective bargaining agreements. The unions are already prepared to seek larger wage increases in the forthcoming negotiations to compensate for the loss of purchasing power caused by the surge in inflation.

On Thursday, actuaries said cost-saving measures taken in recent years — such as a Horizon Blue Cross Blue Shield care navigation program that was intended to reduce costs by up to 3.5% but has not been delivered — yielded lower-than-expected savings in 2021. and actuaries have largely eliminated these estimates from forecasts for the coming year.

“A lot of this is because our members have so much choice. They can go wherever they want instead of going to the [GP],” said Joyce Malerba, deputy director of health services at the State Treasury Department.

Local government and state official plans worked at a loss in 2020 and 2021, losing more than $280 million last year.

A rush of reactions

Thursday’s meeting wasn’t the first scheduled on the raise. Read also : A to Z / Fair offers a variety of food options. The commission was scheduled to meet on July 25 to consider the rate hikes, but withdrew the proposal after an outcry from the New Jersey Association of Counties and the New Jersey League of Municipalities.

Republican lawmakers have called for the creation of a special committee to review proposed rate hikes. Rep. Christopher DePhillips (R-Bergen) urged the state to enact reforms detailed in a 2015 report produced by the New Jersey Pension and Health Benefit Study Commission.

“The state spends almost three times what a private employer contributes on health care. Neither taxpayers nor government workers can sustain this,” DePhillips said.

Sen. Teresa Ruiz (D-Essex) and Sen. Paul Sarlo (D-Bergen), chairs of the Senate Budget Committee, have tabled a bill that would expand membership of the State Health Benefits Commission, which actually sets tariff rates, and their school equivalent — hoping that larger membership would expand deliberations as well.

Turner has introduced legislation that would require the two commissions to publish annual interest rate recommendation reports prepared by actuaries and use federal aid to cushion this year’s increase.

Assembly Speaker Craig Coughlin (D-Middlesex), MP Lou Greenwald (D-Camden) and MP Eliana Pintor Marin (D-Essex), the budget leader in her chamber, also described the proposed increases as “major concern”. .

But that discord did not reach the Plan Design Committee, where union members emphasized working with administrators to reach an agreement that would avoid overburdening public workers.

“We need to allow this process so that we can work together and find solutions together,” said Jim McAsey, committee representative for the Communication Workers of America union. “We must not give up on solving this amicably.”

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