The biggest cost in government, as in most private businesses, is employees. And right behind their wages is the cost of their benefits, particularly health insurance.
This year the Christie administration and the unions representing state and local employees have been working together to reduce health-benefits costs. Last month they celebrated an impressive achievement — no increase next year in premiums for workers in the State Health Benefits Program and $1.6 billion in savings for the state.
The Communications Workers of America called it “a big deal” for the state employees it represents, who had seen premiums rise as much as 9 and 10 percent in some years.
The state credited the joint panel of state and union officials with finding ways to reduce costs that kept the quality and quantity of care intact. Changes to the coverage plan included prescription-policy adjustments and some potential reduction in costly out-of-network services.
But the biggest driver of savings was a change in how the state selects its pharmacy-benefits manager. Companies will now participate in a reverse auction, competing on price to provide prescription drugs. That change is expected to save $350 million in 2018 and $1.6 billion over the next three years.
The union and state officials hardly had time to bask in deserved praise before the Christie administration spoiled it by going after the teachers union for not delivering more potential savings.
Teachers are covered under the School Employees’ Health Benefits Program, and the New Jersey Education Association didn’t agree to changes similar to the coverage for other government workers.
In late October, state Treasurer Ford Scudder sent teachers in 291 school districts a letter telling them their health insurance premiums will increase 13 percent next year and criticizing the NJEA for blocking changes that would have saved them and the state money.
He said the union was costing its members $20 million and New Jersey taxpayers $170 million by failing to do what other government employee unions were doing.
NJEA officials said that even had the changes been made, premiums next year would have risen about 8 percent. And they said members would have felt a “significant impact” from the changes, such as required use of generic drugs, increased emergency room co-pays and reduced reimbursement for out-of-network acupuncture, chiropractic and physical therapies.
The state is entitled to press the teachers union to be more efficient in spending taxpayer dollars on the health care of members, but lobbying union members directly is an improper way to go about it. Instead, the administration should have made its case to the public through the news media.
State government shouldn’t blame unions for choosing the more expensive options from what the government offers them. Legislators and governors can limit how much they spend on government employees if they wish.
The Christie administration figured teachers would want to know their union was responsible for a failure to reasonably control their out-of-pocket costs.
But taxpayers have a much greater interest in controlling what the state and local governments are taking out of their pockets, and that’s where the administration should have directed its information campaign.