The battle over healthcare costs

I don’t often ask our members for help on issues. I have always taken the position that my role is to solve problems for our members. But we are in a fight where the opponent owns the battlefield and the guns and has a band of mercenaries who are formidable — but not unbeatable.

I know I preach to stay off social media, but in this case, I need you to share this article and its information on every outlet you have access to, and make sure your elected officials and executives read it.

On Sept. 14, a day that the state of New Jersey set as an artificial deadline for rate renewals, I watched the governor’s appointees on two commissions block legitimate and meaningful health benefits reforms in the interest of corporations over taxpayers and workers. The state demanded that the Plan Design Committee (PDC) meet at 9 a.m. to vote on a package of resolutions that have been renewed every year since 2016.

The labor members wanted to make some changes to one of the resolutions so that they could reassert the committee’s authority over the prescription drug formulary, especially in light of a statement that the pharmacy benefit manager OptumRx made in a public meeting that it couldn’t tell us that there wouldn’t be a negative effect to the plan rates. The state members would not allow that to move forward, and in light of a deal where the state was going to subsidize the rates for state workers as long as the committee renewed the resolution for another year, the labor members chose that battle for another day (discussed later in this article).

On Sept. 12, the labor members submitted a package of resolutions that would attack exorbitant costs, not go back to the cost-shifting moves that they continually propose in order to keep premiums down.

The resolutions we proposed were as follows:

1. End contracts with nonperforming or underperforming point solutions: The NJ Division Of Pension and Benefits currently contracts with over 10 vendors to provide specialized services for topics such as weight loss and diabetes management. Often, these services are billed either per member per month or on a fee-for-service basis. This resolution would direct the division to drop any solutions operating at a loss or not providing the expected return on investment with the assistance of the Validation Institute or similar entity. The resolution would also direct the division to identify and employ the services of a vendor with a documented history of effective education of
members about health, healthcare and health benefits.

2. Direct OptumRx to manage medical pharmacy costs billed from medical providers: This resolution would immediately task the current pharmacy benefit manager (OptumRx) to manage specialty medicines dispensed by medical facilities and billed through the medical portion of the coverage. This area is prone to price gouging, which can be curtailed with proper management. A presentation to the members of the SHBP Plan Design Committee last year showed that the state would save $1.18 billion if it used the specialty medicines program.

3. Direct PDC to identify broad-based, reference-based methods to achieve a minimum 10 percent savings: This resolution directs the PDC to investigate and identify broad-based, reference-based pricing methods with the goal of 10 percent cost savings. The PDC would also be tasked with creating a report for the full committee by Dec. 1.

4. Expand access to the First Responder Primary Care Medical Home (FRPCMH) Pilot Program by adding certain CWA and AFSCME titles: The direct primary care model promotes savings by reducing barriers to primary care doctors, which promotes early detection of disease as well as consistent health management. The FRPCMH pilot bills on a fee-for-service model at a set rate, which promotes cost control. Expanding access by adding titles will encourage increased utilization of primary care physicians, which is expected to manage specialist utilization as well as downstream costs.

5. Create a state-level Claims Stabilization Reserve (CSR) fund similar to the CSR used for Local plans: The CSR is a fund to hold approximately two months of anticipated Local plan claims payments to ensure the ability to pay claims. Although the state plans operate on a pay as-you-go scheme, a state-level CSR would readily show the accuracy of Aon’s projections —specifically, if rates are set too high. Traditionally, the Local CSR would grow well beyond the two-month target (indicating premiums were too high), and the overage would be used to reduce premium increases to the Local plans.

The state representatives on the PDC, all governor’s appointees in state employment, fought tooth and nail to keep these resolutions from the agenda, and ultimately, I was given the honor of pushing them to a vote by my colleagues on the PDC.

As you can imagine, the labor members all voted yes, and the governor’s representatives all voted no.

The rules that govern plan design changes require seven votes of the 12 to make a plan design change, so all the resolutions failed.

These resolutions alone would have instituted changes that would yield a 20 to 30 percent decrease in the current rates, and it is beyond me as to why they would vote against even studying them, or even abstaining. They just voted no.

You can make your assumptions, but a few questions you may ask yourself are:

• Were the changes too disruptive to Horizon’s OptumRx and hospital business models
• Did they not realize the impact of a 24 percent rate increase to local governments, taxpayers or our members’ paychecks?
• Do they just not understand the construction of health benefits and the waste, abuse and fraud in the system?

It was also disturbing that some of the members on the management side did not get the resolutions we presented until 9:46 a.m., during a meeting that the state demanded be held
“promptly” at 9 a.m. I may not be the smartest guy in the room, but I used to be a detective and I remember that actions can define intent.

After several recesses, the PDC unanimously adopted two resolutions that would change urgent care copays to $45 per visit and specialist copays for state employees in the CWA Unity, CWA Unity 2019, NJ Direct and NJ Direct 2019 plans. This change was a direct result of negotiations with the state civilian employee unions, which I will discuss later in the article.

After the PDC meeting was over, the State Health Benefits Commission, the body that sets the rates and is populated by three members from management and two from labor, discussed the rate increase. The labor commissioners, Dudley Burdge from the CWA and Jennifer Higgins from the AFT, both made spirited arguments to delay the vote on the Local rates and objected to the fact that Horizon was not at the meeting to answer questions (which was unprecedented), but Chair Danielle Schimmel repeatedly responded with a scripted answer that referenced thousands of pages of responses through this rate cycle. Ultimately, Commissioner Burdge responded, “But you didn’t answer my questions about Horizon.”

As was expected, the management representatives nonchalantly moved the rate renewal for approval, which passed with a 3-1-1 vote. Commissioner Burdge abstained, and Commissioner Higgins voted “absolutely not,” thus increasing medical rates by 24 percent for most of our members.

Anatomy of the new rates 

State employees: While the state rates were approved with the increases seen on the chart below, the agreement that was struck with several of the state worker unions provided for a tremendous subsidy.

While these are the official rates, the state unions have contractual language that allows for negotiations when the rates exceed a formula. The unions agreed to the increase in urgent
care copays, which the state valued at 0.2 percent of the premium, and the $15 specialist copay increase (except for OB-GYN, which, astonishingly, they couldn’t value at the time of the PDC
vote). They also agreed to a 3 percent increase on employee contributions. This would equate to a subsidy from the state equal to about a 16 percent premium subsidy to state worker
premium share.

It is important to know that this deal was negotiated with civilian unions, and our members in Local 105 and the SLEU were treated like second-class citizens. The state allowed other groups to take the lead — in my opinion, just another example of the state’s view of law enforcement.

Local government rates (county and municipal): As you can see below, the medical rate increase for the local government side PPO plans for active employees is 24 percent, and the prescription is 1.9 percent. If your town uses both the medical and Rx from the state, your rates will increase 21.6 percent.

For early retirees up to age 65, including Chapter 330 retirees, your rates will increase 13 percent for the PPO plans. The only good news in the rate renewal was the fact that the Medicare retiree rates (Aetna plans) are relatively stable at a 0.7 percent increase.

Possible solutions 

We are weighing out strategies and have developed some recommendations. These will be shared with your Local president and State Delegate as soon as the final rates are posted. But one strategy is to have an open and candid conversation with your town leadership and make sure that being in the SHBP is right for your members. If they won’t collaborate with you, then they are fools. All of the ships are sailing in the same direction here. I would also make sure you discuss changing third-party carriers. It is obvious that the state’s current vendor has no ability to control costs; maybe another one does. There is no shortage of other insurance carriers.

Investigate and get the best deal for your members. Ask them to let you be a part of the process — you pay for 35 percent of the plan. It all comes down to change, As we have all heard before, insanity is doing the same thing over and over and expecting different results.

If your town stays in the SHBP, then maybe you can try a new plan for a year while this sorts itself out.

In closing, you should know that NJSPBA President Pat Colligan, Executive Vice President Marc Kovar, First Vice President Pete Andreyev and Director of Government Affairs Rob Nixon
are working on this with legislators, and I can assure you, many are not happy with the way this was handled. I am grateful to have their support as we continue to let Trenton know we are here.

We also owe Lt. Mike Zanyor from the State Police, the labor co-chair of the committee, a debt of gratitude. His hard work and leadership have been invaluable. I also want to let you know that the group of representatives on the labor side for both the PDC and commission has been working tirelessly to produce real healthcare savings. It will come, as soon as our government
stops acting as a wholly owned subsidiary of its vendors.

‘Hear our Call’

NJSPBA members rally with other unions to protest increase in cost of health benefits

By Esther Gonzales 

“Governor Murphy, hear our call, affordable healthcare good for all!”

Hundreds of union workers chanted together as they gathered in front of the NJ State House Annex on Sept. 13. in Trenton. Multiple unions, including the NJSPBA, came to protest the health benefits premium hike for state employees, which ranges from 12 to 24 percent.

Whistles loudly rang out, drums pounded and tambourines echoed in the crowd. Public workers held posters declaring “Healthcare is a human right” and “Healthcare not wealthcare.”

Across the street, the NJSPBA Special Services Trailer was stationed to offer support and the hope that maybe Governor Murphy will hear their voices.

“There’s strength in numbers,” Allendale Local 217 State Delegate Vinny Rizzo stated as he waited for the rally to begin. “If the people in the State House see that we’re the humble working people of the state, we’re the public servants, there’s strength in numbers. We’re here to fight. We’re here to show that we come out every day, we do what we need to do day in and day out. And our voice is going to be one. And we’re going to get this number knocked down.”

Between chants, several speakers addressed the crowd to encourage the public workers and illuminate concerns. Trenton Mayor Reed Gusciora stood at the podium to express his condemnation for healthcare executives.

“They’re the ones that need to take a pay cut,” Mayor Gusciora affirmed. “They shouldn’t be asking you to pay a fair share. They need to pay their fair share. I’m in management, and I can really appreciate how union workers perform. They are the backbone not only of these cities, but of the entire state.”

The crowd subsequently erupted in cheers and applause. And many members questioned whether the state really understands what they go through as law enforcement officers.

“We’re not the enemy,” Ocean County Corrections Local 258 State Delegate Rebecca Roth declared. “We’re here. We’re giving back to the community. And all we’re asking is for them to work with us, talk to us and come to an understanding or agreement on something reasonable. Not something that’s so outlandish where people can’t even afford to put food on their table or a roof over their head. They’re going to increase our benefits? It makes people almost not want to go to work.”

Englewood Local 216 State Delegate Carlos Calderin was hopeful that maybe the strength in their numbers would be enough to get the governor’s attention to create the change they
are advocating for.

“The unions are still strong, and they show up in good numbers and support each other,” Calderin explained. “Hopefully we can send a message to the governor and the Assembly and the Senate and try to get stuff done. We’re willing to pay our fair share, which we are now. And for it to go up more, it’s not the right thing to do.”

As the ones who stand on the front lines, many members hoped that their rally cry would send their message loud and clear.

“I’m hoping it’ll make a difference somehow,” Seaside Heights Local 252 member Dan Bloomquist added. “I’m hoping they’ll negotiate with us and not just demand that we pay higher healthcare contributions. And when we come together and stand strong, we make our voices heard.”