Princeton Urges State Action As Health Benefit Premiums For Local Governments Jump 36.25%

PRINCETON, NJ — Princeton's mayor and council approved a resolution urging state leaders to adopt reforms aimed at slowing unsustainable increases in health benefit premiums for public sector employees.

The Council unanimously passed the resolution at the Tuesday meeting.

Councilman David Cohen said, "I really appreciated that this resolution had concrete suggestions of what kinds of reforms should be undertaken to get the costs under control. So, it's a really good resolution."

The resolution focuses on the State Health Benefits Program, known as SHBP, which provides medical, prescription drug and dental coverage to qualified state and participating local government employees, retirees and eligible dependents.

According to the resolution, SHBP plans are self-funded, with benefit costs paid from a fund supplied by the state, participating local employers and member premiums.

The document says the rate increase for the 2026 Local Government Employer Group is 36.25 percent.

It also says that the increase does not include fully funding the loan to the SHBP Local Government Group under c. 86 or bringing the Claims Stabilization Reserve to the required two-month balance.

Since the end of 2020, nearly 200 local government employers have exited the SHBP, representing what it describes as a nearly 30 percent decline. As a result, the resolution says that it has largely left local governments with the highest risk in the plan.

The document also cites budget testimony in which State Treasurer Binder noted that, while Treasury did not have final numbers, "based on the plan actuary’s midyear reports and SHBP Local Government fund levels, it is possible that rate increases could be as high as the rate increases, we experienced last year."

Princeton's resolution says the proposed increases would affect both local property taxpayers and public employees during a period of record inflation.

It also says municipalities have taken cost containment steps to make affordable and quality health care available to employees and their families, but public sector health benefit plans remain too costly.

Princeton is urging state leaders to enact long-term structural reforms.

Those steps, according to the resolution, should include eliminating costly plan designs, modifying co-pays for specialists and urgent care, restricting out-of-network coverage and GLP-1 drugs, implementing a Reference Based Pricing system, streamlining the use of Health Savings Accounts and Flexible Spending Accounts, and improving medical transparency and data collection.

Princeton claims that failure to make those reforms could leave local officials with hiring freezes, eliminated budgeted vacancies and tax increases.

Copies of the resolution were sent to Gov. Sherrill, State Treasurer Binder, Senate President Scutari, Assembly Speaker Coughlin, U.S. Sen. Cory Booker, U.S. Sen. Andy Kim, Assemblyman Roy Freiman, Assemblywoman Mitchelle Drulis and the New Jersey State League of Municipalities.