Newark Faces ‘Astronomical’ Health Insurance Hikes For City Workers

NEWARK, NJ — Newark is facing “astronomical” health insurance rate hikes for its city employees, and it may bring the pain for local taxpayers, officials say.

Based on a vote by the State Health Benefits Commission on Sept. 14, some municipal governments in New Jersey will see an estimated 23 percent health insurance rate increase, while state employees will see about a 21 percent hike. The increased rates will affect the health care plans for more than 800,000 state and local government workers.

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On Friday, Newark Mayor Ras Baraka released a statement blasting the rate increases, which the city had “neither control nor say” over.

The mayor said that municipal officials are trying to find a workaround.

“At a time when health insurance companies are making record profits, plans to increase health care costs for New Jersey public employees are a betrayal of thousands of hardworking members of Newark’s municipal family, who are already being harshly impacted by rising costs of living,” Baraka said.

“The city could be forced to bear these expenses, which would squeeze our taxpayers,” Baraka added.

The mayor continued:

“Adding these costs will only create additional financial hardships for these dedicated workers, retirees, taxpayers and their loved ones. While we are disappointed in this decision, my administration is working non-stop, around the clock, to find viable solutions that will protect our workers from this massive increase.”

With open enrollment quickly approaching, and the State Health Benefits Plan (SHBP) – of which Newark is a member – “increasing its rates significantly,” the City of Newark is faced with trying to mitigate these “astronomical increases” for the benefits of its employees, retirees, and their dependents, Baraka’s office stated.

The mayor’s office added:

“To combat these moves, the city is going to market to solicit both fully and self-funded medical plans from Blue Cross/Blue Shield (BCBS) of New Jersey and Aetna; seek to create a new pharmacy benefits plan; and work with HealthCare2U, a national company, to provide part-time workers who lack medical benefits with access to non-emergency care. With the current rates and payment structure, in order for the city to leave the SHBP, it would have to front approximately $32 million to the state, which represents our portion of outstanding medical and prescription claims, as well as administrative costs.”

Baraka isn't the only elected official from Newark to criticize the latest increases.

Senate Majority Leader Teresa Ruiz, who represents the city in the 29th District, expressed her "disappointment" with the rate hikes earlier this month before they became official.

Ruiz wrote:

"The financial realities we have faced due to the pandemic have been tough. With the recent announcement of a double digit increase for public employee health benefits, the outpouring of concern on this issue is understandable. While nationwide health benefit rate trends have increased roughly 10 percent, New Jersey's increase absent any solution, could ultimately lead to higher property taxes. We should all be concerned because there are consequences for employees, state and local government, schools and the taxpayers. More robust discussions need to occur to find immediate solutions to lessen the financial impact this year and to produce long term cost savings. The committees should put off approval of the proposal to allow for productive negotiations to find these solutions. In addition to taking actions to alleviate the immediate financial impact of this proposal, they should reform the process so this never happens again. They need to bring greater transparency and accountability to what is an opaque process that allowed these proposed increases to go unchecked. Expanding the membership of the commissions to include representation of the sectors that will feel the impact is a strong step in the right direction."

“Health care costs and services are a major concern for everyone – they should be managed responsibly and effectively,” Ruiz added.

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>> Read More: No Tax Increase In Massive Newark School Budget (What To Know)

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