Murphy points to about $100M in health ben­e­fits sav­ings

The Trentonian (Trenton, NJ) - - FRONT PAGE - By Mike Catal­ini

TREN­TON, N.J. » New Jersey’s un­der­funded state worker re­tire­ment sys­tem can save up to $100 million from an au­dit and other cost-cut­ting mea­sures, Gov. Phil Murphy’s ad­min­is­tra­tion said on Thurs­day.

The an­nounce­ment, in a state­ment from Trea­surer El­iz­a­beth Muoio, comes af­ter the Demo­cratic ad­min­is­tra­tion and Demo­crat-led Leg­is­la­ture en­acted a $37.4 bil­lion bud­get ear­lier this month and as Se­nate Pres­i­dent Steve Sweeney calls cost-sav­ing mea­sures, in­clud­ing re­vamp­ing the state’s pen­sion and health ben­e­fits sys­tem, which carry an es­ti­mated $90 bil­lion un­funded li­a­bil­ity.

Muoio said the sav­ings out­lined Thurs­day came a day af­ter a meet­ing with the state’s health con­sul­tant that sug­gested pre­mi­ums could rise by 6 per­cent next year. She said the idea is just an “ini­tial” cost-cut­ting pro­posal.

“Ul­ti­mately, our goal is to find the most cost-ef­fec­tive means to de­liver qual­ity health ben­e­fits to our nearly 1 million state and lo­cal gov­ern­ment and school em­ploy­ees,” Muoio said.

The state over­sees ben­e­fits for roughly 800,000 peo­ple. The sav­ings Murphy’s ad­min­is­tra­tion pro­posed are nearly 3 per­cent of $3.4 bil­lion in health ben­e­fits in­cluded in the state bud­get this year.

The sav­ings Muoio out­lined could lead to an es­ti­mated $77 million through an au­dit of in­el­i­gi­ble en­rollees. Muoio also says up to $25 million could be saved by stream­lin­ing costs from third­party ven­dors. She said com­mit­tees tasked with de­sign­ing the re­tire­ment plans would work to­ward low­er­ing pre­mi­ums, but she didn’t of­fer many details.

The new sav­ings also are smaller than roughly $1.4 bil­lion in cuts pro­posed by a bi­par­ti­san com­mis­sion un­der Repub­li­can Gov. Chris Christie, who was in of­fice be­fore Murphy. That com­mis­sion rec­om­mended, among other changes, switch­ing from top-qual­ity health plans to cov­er­age in line with the pri­vate sec­tor.

Demo­cratic law­mak­ers wel­comed cost-cut­ting ideas, which Sweeney said this month that he would pur­sue with the ad­min­is­tra­tion.

Bud­get Com­mit­tee Chair­man Paul Sarlo called the ideas “re­spon­si­ble” and said they could elim­i­nate “waste­ful spend­ing.”

Repub­li­cans said the plan doesn’t go far enough.

“This is a very min­i­mal at­tempt at sav­ings for the tax­pay­ers of New Jersey,” As­sem­bly Mi­nor­ity Leader Jon Bram­nick said.

Se­nate Mi­nor­ity Leader Tom Kean Jr. said the state’s pen­sion and health ben­e­fits sys­tem was in “cri­sis” and said “com­pre­hen­sive” re­forms were needed.

The cost of pub­lic pen­sions and health ben­e­fits is a peren­nial is­sue in New Jersey, where Demo­cratic and Repub­li­can ad­min­is­tra­tions skimped on pay­ments over many years, bal­loon­ing the un­funded li­a­bil­ity. Christie agreed to fund the pen­sion in ex­change for worker give­backs but cut the pay­ment when state rev­enue got tight. That an­gered la­bor and ce­mented Christie’s and unions’ dif­fi­cult re­la­tion­ship.

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