State health insurance costs expected to rise for Warren County, municipalities and school districts

A month after Warren County joined New Jersey's health benefits program, the state is considering double-digit increases in the premium costs charged to counties, municipalities and school districts covered by the plan.

The county might now fall short of its originally projected savings of $1.5 million, but joining the program is still expected to save money in brokerage fees and prescription drug coverage costs, county Freeholder Everett Chamberlain said Wednesday.

"We're going to save hundreds of thousands of dollars," Chamberlain said.

A consulting firm hired by the state has recommended average premium rate increases for active employees of 18 percent for counties and municipalities in the program, and 23 percent for participating school districts. State employees would see an increase of 11 percent.

The two commissions overseeing health benefits are scheduled to vote Wednesday on the recommended increases.

The state had used reserve funds to hold down premium costs last year, but the proposed increases are necessary to pay for claims and replenish the reserve accounts, said Tom Vincz, spokesman for the state Department of Treasury.

State health benefits for counties and municipalities are projected to cost $856 million next year, $1.84 billion for school districts and $1.78 billion for state workers. The increased premiums would take effect in January.

Despite the proposed premium increases, Warren County freeholders do not intend to increase employees' health care contributions beyond current rates, Chamberlain said. The contributions are based on salary and coverage levels.

Facing an aging work force with greater health care needs, the county is able to spread its risk over a larger population within the state program, Chamberlain said. The move also should result in savings of roughly $300,000 to $500,000 in prescription insurance costs and $300,000 in commission fees paid to an insurance broker, he said.

The county's previous insurance costs had been increasing annually by 12 to 15 percent, at a time when the state program was posting smaller increases, Chamberlain said. Chamberlain said he sees next year's proposed increases as an anomaly in the state program.

The county based its original projection of $1.5 million in savings on a comparison of state and county insurance costs over the past several years, he said.

Tracy Smith, president of a union representing more than 400 county employees, said the union would like to see health care contributions remain the same.

She added that the issue remains part of ongoing contract negotiations. The union's previous contract expired in December.

"It is a major concern, and any type of contribution -- it's going to hurt the pocket if it's any more than what we're paying now," Smith said.

In Hackettstown, which has participated in the state program since 1994, town officials at least have until January to figure out how they will cover the additional costs, town Administrator William Kuster said.

The municipality could budget more for health care, which would affect the municipal tax rate and require employees to pay more toward their insurance, Kuster said.

Referring to the possible 18 percent hike, Kuster said, "Certainly, that would hurt."