Bloomberg News

New Jersey Cities Shunning State Health Plan Lose $100 Million, Audit Says

February 28, 2012

New Jersey (STONJ1) cities and towns are missing out on more than $100 million in health-care savings by not joining the state’s insurance plan, according to an audit released today.

Four municipalities passed up almost $12.6 million in savings by forgoing the State Health Benefits Plan in favor of other options, the audit from Comptroller Matthew Boxer shows. The report focused on Essex County, home to Newark, as well as the townships of Brick, East Brunswick and Haddon.

The four local governments would have avoided a combined $1.1 million in insurance-broker fees by joining the state plan in 2009 and 2010, the years studied by the audit. On average, the total savings would have been $1,007 for each enrollee in 2009 and $979 in 2010, according to the report.

“Health coverage for public employees is an area in which substantial savings can be realized for taxpayers,” Boxer said in a statement accompanying the report. He estimated that if all New Jersey’s local governments participated in the state plan, the amount would exceed $100 million a year.

The communities examined have a combined population of more than 921,200, and the number covered by municipal health insurance was more than 6,300. Essex County would have saved the most, at about $9.57 million over the two years, according to the report.

Hard to Do

In a written response to the audit, Essex County (10176MF) Administrator Ralph J. Ciallella said it’s impossible for the county to move toward a complete change-over to the state plan, citing union contracts and rulings from the courts and arbitrators over benefits.

The state plan was set up in 1961 to provide health insurance to qualified public workers. Under a pension and benefits overhaul signed into law last year by Governor Chris Christie, a Republican, all public employees are required to contribute more of their salaries for medical coverage based on the cost of the plans.

The new requirement is being phased in over several years and contributions are based upon salary.

To contact the reporter on this story: Terrence Dopp in Trenton at tdopp@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net


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