MORRIS TWP. – A major spike in state health insurance premiums will take effect next year and towns across New Jersey are already bracing for the impact.
Municipalities in Morris County are not immune.
The mayors of Chatham Township, Chatham, Madison, Morris Township, Morristown and Morris Plains, all located in the southeast portion of the county, gathered on the steps of the Morris Township Municipal Building the morning of Tuesday, Nov. 29, for a press conference to discuss the significance of the proposed 20 percent increase to the State Health Benefit Program at the local level.
Morris Township Mayor Mark Gyorfy said the increase would be a “gut punch” to the towns, their employees and the taxpayers.
“To put it in perspective, our towns were dealt blows during the COVID-19 pandemic with a burden of added costs, delays and regulations,” he said. “As we started to get back on our feet, inflation came with huge increases for basic goods and services, causing towns like ours to push off projects and reduce long-term investments just to make ends meet.
“Now, as we finally started seeing light at the end of the tunnel for our public finances, our public employees and municipalities are left grappling with insurance premium hikes of up to 24 percent,” he continued.
Specifically in Morris Township, Gyorfy said about $794,000 in taxpayer money would be paid toward healthcare premiums in the upcoming budget. The municipality’s employees – which include police, firefighters, public works, parks and recreation and sewer utility personnel as well as the township professionals – would together have to pay about $215,000 out of their own pockets next year.
Health costs plus the pension contribution and prescription drug premium increases will bring the added costs for taxpayers to a total of about $1 million, Gyorfy said.
Increasing the tax levy by the full 2 percent allowed by the state in next year’s budget would produce less than half of that – roughly $450,000, he said.
Gyorfy said to make up for this cost, towns across the state would have to consider hiring freezes, layoffs, pauses on public investments and other options.
“How’s that for a happy new year for our residents and for our taxpayers?” he asked.
He said township employees, even with salary raises, will take home less money than they did this fiscal year
Mayor Robert Conley of Madison said the goal of the press conference was to encourage the state to “take action to ease this burden” for its 564 municipalities.
He said the state health benefit plan provides a selection of health insurance plans for government employees at the local, county and state level, and costs have previously been able to be controlled because the benefit plan is spread across the entire state.
This particular increase, however, is too extreme to be able to control, he said.
Conley said for Madison, a 20 percent health premium increase would amount to a one percent increase in the overall budget for next year.
With the addition of the health benefit premiums for public library and utilities employees, which are not part of the borough’s operating budget, the total cost would be about $2.4 million.
“This would be the equivalent, to put it in perspective, of our fourth largest department, police being number one, DPW number two, our paid fire department number three,” he said. “If health insurance was a department, that would be number four.”
Chatham Township Mayor Ashley Felice said there are 49 employees and 62 retirees who will be impacted in the township. Felice, a Republican, joined the five neighboring Democratic mayors for the press conference.
“Increases of this size are not something people typically anticipate or plan for,” she said, “and when you couple this with the already out-of-control inflationary environment impacting them at the grocery store, gas station, etc., it has a snowball effect, which forces them to make hard decisions on what they can and can’t afford monthly.”
She said better planning on the part of the state government could have prevented this.
Chatham Mayor Thaddeus Kobylarz said the hike in health premiums will jack up its health insurance costs by about $145,000, amounting to a 12 to 15 percent increase in the operating budget appropriations for this line item.
In the short term, the borough has offered a cash incentive for its employees to switch to lower cost health care plans, noting the majority are currently on one of the two most expensive plans.
“This would not eliminate the overall cost increase, but would at least mitigate the heavy burden to Chatham Borough,” he said.
Only eight of the borough’s 40 employees have made the switch, but Kobylarz said he understands there are personal reasons to keep the plan they already have.
He said two long-term solutions under consideration are looking at alternative health plan options and creating a joint insurance fund for local governments. Under the fund, municipalities would “band together” to provide health insurance for their respective employees.
The main focus is for all employees to be able to afford healthcare.
Mayor Tim Dougherty of Morristown said the issue of increases needs to be addressed because there may be additional double-digit raises in the near future, which would set the municipalities back even more.
He said while employees in his town are self-insured, they still anticipate an increase of about 16 percent.
“The other 800-pound elephant in the room, is eventually we’re going to have to talk about how communities can merge together in ways to save tax tax dollars,” he said, which may eventually include merging the towns themselves, not just services like public works or fire departments.
He said there is a limit to continually raising taxes for residents before they decide to move elsewhere.
“I think there’s time now that we have to seriously sit down at the table and figure out how we’re going to move forward over the next decade, the next 20 years,” he said.
Jason Karr, mayor of Morris Plains, said the health benefit premiums increase will affect 37 employees in that town, which would amount to $200,000 more than this year.
He agreed the impact would likely be felt for several years, that this is not just a one time issue.
“This is a problem that’s not just for now, but a problem that’s going to linger on for years to come,” he said.
Karr added it would behoove state legislators to sit down and brainstorm solutions to offset the burden and directly involve all of the municipalities in the discussions.
“We weren’t involved in this and I take that as a kind of a hit in the gut,” Karr said.
Gyorfy, after the press conference, said the impetus for holding this kind of public event is because this is the time of year when many municipalities are really starting to put their budgets together for the next year.
“We’re actually starting to do the projections on what our revenues are going to be on and what our costs are,” he said.
Getting some movement from the State Legislature on finding ways to reduce the increases would help every town in New Jersey, he said.
Conley said the spike has been the number one issue for the New Jersey Conference of Mayors, an organization that provides an open line of communication between the municipalities and state and federal legislators. The conference’s president, Mayor Janice S. Mironov of East Windsor Township, has visited Trenton trying to get the ball rolling toward some type of solution to lessen the projected burden, he said.
When asked if this state health benefit premium spike is a permissible reason for towns to exceed the 2 percent tax levy cap set by the state Conley said he did not foresee that happening in Madison.
The goal, he said, is to minimize the cost for taxpayers “no matter what.”
Gyorfy said Morris Township has to figure out how to best move forward at least with next year’s budget, while maintaining the same level of services as this year.
“We’ll do what we have to do to make sure our residents are getting what they need, but also trying to have everything within reason like we always try to,” he said.
State Senator Anthony Bucco, R-Morris, said in a statement following the press conference the ire directed toward Gov. Phil Murphy.
“The Murphy administration never hinted to mayors, legislators, or public employees that health care premiums for those enrolled in the State Health Benefits Plan would rise by more than 20% this year,” he said. “It’s clear, however, that Governor Murphy knew this was coming as early as February, months before the increases were announced. Had the governor shared that knowledge with the rest of us this spring, we could have worked on a solution with mayors, local governments, and the administration as part of the State Budget adopted in June.
“Unfortunately, that never happened because the administration wasn’t transparent about what it knew,” he continued.
He said the governor has refused to consider const-saving solutions and has not held Horizon Blue Cross/Blue Shield accountable for its failure to achieve savings for the State Health Benefits Plan as required in its contract with the state.
Bucco noted there were $10 million in surplus revenues and unspent COVID-19 pandemic relief funds available during the state budget process that could have been used to try to prevent such a high spike in premiums.
“The Murphy administration has ignored multiple opportunities to work with stakeholders to control costs and find an equitable and affordable solution to prevent these massive premium increases,” he said. “As a result of these many failures, local government budgets are getting slammed with a huge unexpected cost that will likely lead to big property tax increases in Morris County and across New Jersey.
“Governor Murphy seems to be the only person in New Jersey who doesn’t think this is a problem that needs to be fixed.”
