2016 State Health Benefit Rate Increases

On Friday, July 17, 2015, the State Health Benefits Commission held its Rate Renewal Meeting where it on voted to approve rates that take effect on January 1, 2016.

Your two AFL-CIO appointed union Commissioners voted against the proposed rates. Dudley Burge (CWA), the representative for Local government employees voted against the rates because they shift costs from single and employee/spouse or partner tiers to families and employee/child tiers.  Debra Davis (CNJSCL-AFT), the representative for State government employees voted against the rates because none of the new lower priced tiered networks will provide coverage for members who live outside of New Jersey.

Dudley Burge submitted our questions to the Division of Pension and Benefits and AON-Hewitt, the consulting firm that recommends rate renewal levels to the Division. For the most part, the Division and AON-Hewitt evaded answering our questions. However, below are a couple of chilling answers.

Here are the main takeaways:

Moderate Rate Increases — overall 2016 rates for the State employees plan will go up 5.9 % including 4.5 % for active employees.  This compares to a 7.8 % increase in 2015.

Continued Increase in Parent/Child and Family Rates Compared to Single and Employee/Spouse/Partner -— continuing the multi-year effort to "adjust" rates to reflect actual payments, the Commission voted for rates that will increase rates around 2.1 % for employee only and employee/spouse in the State plan and 3.6% in the Local plan compared to 5.9 % for family and 8.2 % employee/child in the State plan and 7.4 % for family and 9.7 % for employee/child in the local plan.

Commissioner Burge stated that as a matter of public policy we should not be increasing the burden on families, especially on single parent families and so the Local and State employee representatives voted against this.   Unfortunately, it appears that management is planning another such increase next year.

Plan Design Committee Reforms (PDC) — AON stated that in 2016 there will be $108M State and $54M Local savings from the reforms implemented by the PDC in July, 2015.   About 85 % of savings is from the Compound Drug change. The PDC is comprised of an equal number of union and State representatives. Most of the time they are deadlocked on plan design changes that come before them.

Tiered Network Rates — at first Aetna appeared a little surprised that they are being asked to implement the same type of tiered network as Horizon, and appear to be behind Horizon in its implementation.   

The tiered network rate is set at 75 % of NJ Direct 15.