Health care talks unlikely to cut costs for public workers

Seal_of_New_Jersey

Unions representing public workers in South Jersey will have more leeway to negotiate health-benefit contributions after a provision of Gov. Chris Christie’s “toolkit” health care reforms expired last year.

But some municipalities don’t expect workers will pay less for coverage, saying already tight budgets can’t handle reduced employee contributions.

“I do know one thing, the towns don’t have the money,” Northfield Council President Jim Travagline said. “When health insurance goes up 8 percent every year, you have to find it other places or you have to reduce the benefits. You just can’t give employees more benefits if there’s nothing there to give.”

Egg Harbor Township Administrator Peter Miller said the township’s union contracts won’t be negotiated until next year, but that the plan is not to reduce how much employees pay toward their health care.

“This is the base year. We’re not going to go backward,” Miller said.

The 2011 law requires public employees to make a contribution toward their health benefits based on their salaries. The total contributions, between 3 percent and 35 percent, were phased in over four years.

The law, Chapter 78, allows for contributions to be renegotiated after the phase-in was complete and the particular union’s contract expired.

Senate President Steve Sweeney, D-Salem, Gloucester, Cumberland, who sponsored the bill, said the reforms helped to “contain costs and they set a precedent that will continue to have a moderating effect on new contracts.”

“The health benefits go back to the negotiating table, which is where it belongs. This was Senate President Sweeney’s intention when the reforms were enacted,” said Richard McGrath, a spokesman for Sweeney.

Hetty Rosenstein, New Jersey director for the Communications Works of America, which represents 15,000 county and municipal employees statewide, called Chapter 78 “a very blunt instrument.” She said the schedule set forth in the law “limits the ability of the employer and the unions to negotiate cutting-edge approaches to health care costs that actually reduce the cost of health care as opposed just cost-shifting.”

“CWA will seek to negotiate something other than the Chapter 78 schedule where it benefits our members, and yes, we are always looking to lower the cost of health care, but that does not necessarily translate to higher costs for the employer,” Rosenstein said.

The health care reform bill was touted by Christie as providing an additional $3.1 billion for state taxpayers over 10 years, but for many Atlantic County municipal budgets, the savings have been minimal.

Margate saw a savings of $210,820 in group health benefit costs from 2014 to 2015 — one of the largest savings in the county.

Chief Financial Officer Lisa McLaughlin said the average yearly increase for the cost of benefits under the State Health Benefits Plan has been 8 percent. She said this year’s budget has a $250,000 increase in employee contributions, “which is basically offsetting the increase in the premiums.”

Margate is in the final year of the four-year phase-in of employee contributions.

“That means for next year, we’re going to have approximately $250,000 less that we’re going to have to come up with in our budget,” McLaughlin said.

Travagline said the reforms have helped in Northfield — last year, the city saw a $15,000 increase in group health insurance costs — but were not a solution. Last year, to reduce costs, Northfield switched its employees, who are on the state plan, from a $10 co-pay plan to a $15 co-pay plan.

“There was no savings,” he said.

With a budget set to be introduced in March, Northfield is looking to hold the line on tax increases for its residents as its ratable base shrinks rapidly.

“In Northfield, we are looking into furloughs. We are looking into privatization and we are looking into making the departments more efficient, whether it’s a third-party vendor or unfortunately maybe a layoff, hopefully through attrition. We are looking at everything,” Travagline said.

For Egg Harbor Township, Miller said group health benefits costs — while they increased about $442,952 from 2014 to 2015 — are a small component of dozens of budgetary line items in a $39 million budget.

Miller said that from 2015 to 2016, the township’s group health care cost is going up by $100,000 “because we’re picking up more contributions by employees.”

He said that the health care reform law helped to bring municipal costs in line, but hasn’t helped to reduce the overall burden.

“From the standpoint of shifting the cost onto the employee, yes it has done that,” Miller said. “As large as a group of lives covered in the State Health Benefits Plan, the state should have greater leverage in negotiation with the providers. That doesn’t seem to have been working the last couple of years.”

Marcus King, president of Teamsters Local 331 in Egg Harbor City, which represents hundreds of municipal and county workers in Atlantic County, said health care should have remained a negotiating tool for union members.

“I don’t think we would ever go back to employees not contributing toward their health care. I will tell you that we’ve always negotiated health care when we negotiated wages in the contract,” King said. “I’m hoping to go back to negotiate that benefit again. I would like to see a flat dollar amount opposed to a percentage.”

He said the health care reform law left a “big wide hole” in municipal and county budgets.

“Now we have this crater and nobody knows how we’re going to fill it,” he said.

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