Proposal for moratorium on N.J. state insurance pool draws fire

A proposal to alter health-care benefits in New Jersey is under fire for a provision that some experts say would push government workers out of the state insurance pool and into plans with private carriers.

The bill introduced by Senate President Stephen Sweeney (D., Gloucester) last month would put a moratorium on new membership in the State Health Benefits Program, a statewide insurance pool that provides coverage to workers in more than 1,000 towns, school districts, and government authorities.

Traditionally, public employers have gone in and out of the state plan depending on whether they can get a better deal in the open market. But with the state plan closed, towns and school districts would be forced to negotiate with private insurance brokers and carriers without the pool to fall back on.

The insurance industry "stands to benefit from this," said Joel Cantor, director of the Rutgers University Center for State Health Policy. "The state plan is extremely efficient relative to the private sector. It avoids broker commissions, and it has a lower cost of capital."

As health-care costs soar around the country, New Jersey's government is debating how to provide coverage for workers while keeping spending in line, with cost-cutting officials like Sweeney and Gov. Christie on one side and public-employee unions on the other.

Not surprisingly, Sweeney's bill, which also would raise health-care contributions for workers, has proved hugely unpopular with the unions. They have latched onto the moratorium provision, calling it evidence of a political push to benefit the state's insurance industry.

"The other side looks like it's enriching the brokers, who do a pretty good business anyhow," said Dudley Burdge, a senior staffer with the Communications Workers of America who serves on the State Health Benefits Commission.

Sweeney maintains that the moratorium will help stabilize the state pool, which has run drastic deficits in recent years. In 2009, the program's reserves fell 30 percent after claims exceeded fees paid by $216.7 million. Last year, reserves dropped $30 million more.

Asked whether the program should have a long-term future providing health insurance to towns and school districts, Sweeney said, "I'm not sure."

"I have a problem with them spending state money to keep the rates artificially low. And until we can fix that, you put a moratorium on it," he said.