New Jersey GOP Calls for Probe Into State Employee Health Costs

John Tozzi
·3 min read

(Bloomberg) -- Republican lawmakers in New Jersey called Thursday for a special committee to investigate sharp increases in health-care premiums for state workers.

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Leaders of the legislature’s Republican caucuses, which are in the minority, sought the investigation after a public meeting last week revealed that preliminary premium rates are set to go up, in some cases by more than 20%.

The increases follow reporting by Bloomberg News that New Jersey officials backed down from a $34 million dispute with health insurer Horizon Blue Cross Blue Shield last year. A former state official who managed the contract said an attempt to recover fees was halted under pressure from the governor’s office. The refund request was over the state’s claims that Horizon had failed to deliver a money-saving care navigation program.

Governor Phil Murphy, a Democrat and former Goldman Sachs Group Inc. senior director, said he didn’t intervene in the matter.

“Governor Murphy has completely failed to control health care premiums paid by the state, local governments, and active and retired public employees,” Senate Republican Leader Steven Oroho was quoted as saying in a news release. The investigation he and fellow Republicans are seeking would need approval from the Democratic-controlled body to go forward.

A spokeswoman for Murphy referred questions to the state Treasury, which oversees the health plan. In an email, Treasury spokeswoman Jennifer Sciortino said the call for an investigation was “knee-jerk political response to a broader challenge being faced across the country due to unprecedented circumstances largely beyond our control.”

She cited disruptions to care patterns due to the pandemic and pointed to public comments that the state’s benefits consultants made last week that other plans are also facing rate increases.

Outside consultants to the state from Aon Plc recently said that they saw no evidence of savings from the disputed program, which was intended to lower the state’s medical costs by steering patients to the most efficient care. They removed expected savings from projected premium rates going forward, which was one factor in driving costs higher for the year ahead, they said at a public meeting last week.

Horizon spokesman Thomas Wilson said the company isn’t involved in setting rates beyond providing data to Aon on claims and cost trends. “Our cost-trend targets are included in the state contract and backed by performance guarantees,” he said in an email, adding that Horizon met the target for 2020 and expects to meet the target when results are complete for 2021.

Officials from the New Jersey Division of Pensions and Benefits said in a May 11 letter that they intended to reinstate the complaint against Horizon that had been put on hold since last year. Horizon has disputed the state’s assertion that it failed to deliver the services it was contracted for.

Health premiums are rising widely across the US as insurers absorb additional costs from Covid-19 and inflation, the Kaiser Family Foundation reported this week. An early review of filings from insurers in 13 states offering coverage in the Affordable Care Act marketplaces showed a median premium increase of 10%, the nonprofit research group said.

(Updates with comments from Treasury spokeswoman in paragraphs 6 and 7)

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