During its January meeting, the State Health Benefits Commission (SHBC) provided an update on the transfer of funds from the state-employee State Health Benefits Plan (SHBP) fund to the local government employee SHBP fund to cover cost shortfalls.
The enabling legislation P.L. 2024, c.86 was signed on October 30 and took effect immediately. From the effective date through the end of the calendar year, the state employee SHBP lent $198 million to the local government employee SHBP and $108 million has been repaid, leaving $90 million to be repaid. The Local Government Employee SHBP is currently running with nine days of cash flow reserves.
As we previously reported, in Plan Year 2024, the increase for the SHBP Local Government Employee Group was 7%. In Plan Year 2023, the increase was 20% and for Plan Year 2025, the increase is 16%.
The Plan Year 2025 Rate Setting Recommendation Analysis for the SHBP Local Government Employee Group showed an actual decrease in enrollment from 2022 to 2023 of 12.8% for Active Employees, 16.2% for Early Retirees, and 11.4% for Medicare Retirees. The decrease in actual enrollment from 2023 to 2024 was 6.1% for Active Employees, 7.1% for Early Retirees, and 4.2% for Medicare Retirees. This reduced enrollment from about 90,000 in Plan Year 2022 to an estimated 76,000 for Plan Year 2025, according report (page 26). Further, a recent analysis of Quarterly Reports of Participating Local Employers shows a decrease of 74 participating employers from the end of 2020 to the end of 2024, representing a 10% decrease from the end of 2020.
The League has been warning that the exodus of local governments from the SHBP Local Government Employees is creating a SHBP Local Government Employee fund with an excessive amount of “bad risk” enrollees that cannot obtain coverage elsewhere and will result in further cost increases. Also, ongoing increases along the lines of the average double-digit, year-over-year cost increases for the past three plan years are unsustainable for local governments that remain in the plan.
The next report should be made at the Plan Design Committee on January 22.
Contact: Paul Penna, Director of Government Affairs, ppenna@njlm.org, 609-695-3481, x110.