Gov. Phil Murphy approved a long-awaited bill overhauling the health care plans for tens of thousands of teachers and school employees, a move proponents argue could save hundreds of millions of dollars for state and local governments each year.
It includes a frequently and hotly debated “Chapter 78 relief,” which means lower premiums that teachers and school employees would see taken out of their paycheck.
The bill is supported by some unlikely allies, including the powerful New Jersey Education Association – a teachers union that often backs Murphy – as well as Senate President Stephen Sweeney, D-3rd District, who often butts heads with the former two.
They argue the bill could save $640 million a year for local school districts, on top of $404 million for teachers and $30 million for the state.
The Assembly approved the bill on Monday, days after Assembly Speaker Craig Coughlin, D-19th District, signed onto the proposal after securing an amendment requiring an actuarial report in the summer of 2023 indicating whether the changes yielded at least $300 million a year. It was approved by the state Senate in March.
“School systems will be able to reduce property taxes or invest more in children’s education,” Coughlin said at the Wednesday afternoon political rally-style bill-signing ceremony at Union High School in Union Township.
Under the new law, the state will create two lower-cost health plans for teachers: the New Jersey Educators Health Plan and the Garden State Health Plan.
While existing NJEA members would have the option to stay in the existing NJ Direct 10 and NJ Direct 15 health plans, or choose the new NJEPH plan on Jan. 1, 2021, the former two would not be offered to any new association members.
The state would gradually phase out the Direct 10 and 15 plans entirely, and enrollees would be encouraged to switch over to the NJEPH plan, because of the lower costs. Retirees would be enrolled in that plan as well.
Meanwhile, premiums at the GSHP would be half that of the educators’ plan, but they would be limited to health care providers in New Jersey. That plan will be offered beginning July 1, 2021. Contributions would be pegged to a percentage of their salaries, rather than as a percentage of the total premium.
This would effectively offer “Chapter 78 relief,” a proposal long-backed by the NJEA since the creation of the Christie-era policy in 2011, requiring members to pay anywhere between 3 percent to 35 percent of their health insurance premiums, depending on their salary and plan.
That debate has been the source of bitter political back and forth over the past decade.
Murphy has taken a much softer stance to public worker unions than has Sweeney when it comes to cutting the ballooning costs of retirement and health care plans. The Senate President has called for top-down structural reform of the health plans, which are unfunded by tens of billions of dollars.
“Today, New Jersey returned to one of the central tenets of our state and that is collective bargaining,” Murphy said on Wednesday.
Sweeney, Coughlin and NJEA President Marie Blistan on Wednesday all stood together – as much as social distancing would allow – striking a tone of comradery.
That was an especially far cry for Sweeney and Blistan—she heads an organization that spent $5 million trying to oust Sweeney during his 2017 reelection campaign, in what became the most expensive legislative race in American history.
“At the end of the day, the teachers wanted what we wanted, we just weren’t talking to each other the way we should have,” Sweeney said. “That might have been my fault for a while.”