On Monday, March 25, State Treasurer Elizabeth Muoio delivered her testimony to the Assembly Budget Committee regarding the State Fiscal Year (SFY) 2025 Budget. Committee Chair Assemblywoman Pintor Marin raised a question about the rates for the State Health Benefits Program (SHBP) in SFY2025, particularly noting the 20% rate increase observed in the SFY2023 Budget. Treasurer Muoio shared insights from the midyear reports on SHBP, which were distributed to legislative offices and the League. She emphasized the data’s indication of a likely substantial rate hike in state health benefits for SFY2025.
Treasurer Muoio attributed the potential increase to factors such as the rise in emergency room visits and the expanded use of prescription drugs. She stressed the importance of local governments being prepared for this possible rate increase.
Division of Pensions and Benefits Director John Megariotis pointed out that current trends suggest a SHBP rate increase that could reach double digits.
The likelihood of rate increases was echoed during the SHBP Plan Design Committee meeting on Wednesday, March 27, when the committee reviewed data showing an increase in both costs and utilization of health benefits. Another factor contributing to a potential increase is what is termed as “pent-up” inflation, which is a result of plan negotiations occurring on a three-year cycle. Because the current plan period did not take into account the higher-than-average inflation rate, the next negotiating cycle will see a substantial increase in costs.
Ultimately, these factors will likely combine to see another double-digit rate increase, although an exact percentage could not be provided.
The League, New Jersey Association of Counties, and various public sector labor groups plan to meet over the next several weeks to advocate for legislative remedies.
Contacts: Andrew LaFevre, Legislative Analyst, alafevre@njlm.org, 609-695-3481, x116 and Paul Penna, Senior Legislative Analyst, ppenna@njlm.org, 609-695-3481, x110.