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Lawmakers press Treasury on steep health premium increases for state and local plans
Summary
Committee members pressed Treasury about midyear projections that could mean double-digit premium increases for the State Health Benefits Program and municipal plans, and asked about drivers, enrollment in the Garden State Health Plan and potential impacts on municipalities and hospitals.
During a session of the legislative budget committee, members pressed Treasury officials about rising health-care costs for state employees and local government participants, pointing to an Aon midyear analysis and asking whether large premium hikes can be mitigated.
"The drivers of the cost increases is not gonna change with the number of TPAs," the treasurer said, describing inflation in medical services, high utilization of outpatient procedures and rising prescription drug costs as the principal factors. Treasury staff said final rates will await the full Aon report and votes by the health-benefit commissions later this summer.
Lawmakers highlighted the consequences for municipalities and public hospitals. One member warned the governors proposal appears to cut University Hospital funding by about 43% compared with FY25 and asked whether that is sufficient for capital and operating needs. Treasury responded that University Hospital is especially reliant on Medicaid and noted the administrations difficult tradeoffs in the budget.
Committee members asked about the Garden State Health Plan (launched 2022) and whether it has delivered cost savings or significant enrollment. Treasury staff said enrollment has grown slowly and that they would provide enrollment figures to the committee.
On local-government exposure, Treasury observed that local entities can leave and re-enter the state plan, which can shrink the risk pool and raise costs for municipalities that remain. The treasurer said there is no simple administrative fix: plan design changes would need legislative or plan-committee action.
Treasury additionally flagged pharmacy costs as a near-term pressure, including specialty drugs with small out-of-pocket costs for patients but large costs to plans.
Next steps: Treasury will provide the final Aon midyear report, commission timelines and enrollment data for GSHP on follow-up requests and will continue to brief the committee as rates are set.
