The Treasury Department issued a report on Tuesday warning that the State Health Benefits Program (SHBP) for Local Governments will face steep annual premium increase and is unsustainable in the long term.
The report noted that for Plan Year 2026, there is at least a 26% rate increase floor when the plan is approved this summer and a cumulative 60% increase over the next 4 plan years. From the report:
What began as a commitment to offer affordable, high-quality coverage to public employees has become a structurally unstable and financially unsustainable system, due to adverse selection, diminished participation, and cost escalation. The plan’s very high actuarial values, a depleted and now insolvent cash management margin reserve (known as the Claims Stabilization Reserve), and a static governance structure have created a self-reinforcing loop of premium increases and employer exits—what actuaries commonly refer to as a "death spiral."
The League has longed warned of these challenges to the SHBP Local Government Group and noted that the Plan Design Committee has not been empowered to make significant plan changes. Further, a local government representative needs to be included as a member of the Plan Design Committee to help solve this situation.
We are reviewing the report with League subject matter experts and will report more fully in the near future. If your municipality is a member of the SHBP, we encourage you to review the report and your options with your municipal professionals.
Contacts: Lori Buckelew, Deputy Executive Director, lbuckelew@njlm.org, 609-695-3481, x112, and Paul Penna, Director of Government Affairs, ppenna@njlm.org, 609-695-3481, x110.