Division of Pensions Issues FAQ on SHBP Proposed Rate Increases
The Division of Pensions and Benefits have posted a Frequently Asked Questions (FAQ) piece on the State Health Benefits Program (SHPB) and School Employee Health Benefits Program (SEHPB) Plan Year 2023 Rate Renewal. At its July 25 meeting, the State Health Benefits Commission (SHBC) considered only appeals and did not address the proposed preliminary rate increases. To date, the Rate Renewal Report is still unavailable. However, in the recently released FAQ, it states that the rate increase will likely “increase by 12-22%, depending on the plan.”
According to the FAQ, “the two factors driving almost all of the premium rate increases this year are 1) increased utilization by members; and 2) overall health care cost increases.” Not only is there more use of services and procedures, but the type of providers used has shifted to higher-cost providers (e,g., specialists, emergency rooms, and urgent care). Also, “the cost of medical services and procedures in 2021 increased overall by more than 5% and up to 18.1% for pre-65 retirees, with the costs of certain procedures or provider visits popular with plan members increasing even more than that.”
Other highlights of the FAQ include:
- SHBC often sets the premium rates in late July but occasionally as late as September;
- The date for the Plan Year 2023 Rate Renewal has not been set;
- The rates must be approved to allow sufficient time to prepare for the October open enrollment periods and provide as much notice as possible to local employers;
- A decision of the SHBC cannot be overruled, there is no statutory authority to override a majority of the SHBC;
- The Plan Design Committee, which is different than SHBC, has the authority to make plan design changes that could lower the costs of health benefits;
- The State cannot negotiate these rates, it is a self-funded plan;
- Saving initiatives are leading to savings, however, it is too early for some of the newer initiatives to realize savings. These represent an estimated approximate 3 percentage points of the total rate increase and are not relied upon in this year’s projections;
- The use of the reserves for a premium holiday in 2022 is unrelated to the rate increases this year;
- The impact of proposed rate increases will vary for local governments participating in the SHBP; and
- The impact on employees in the SHBP are unknown at this time.
The League, the New Jersey Association of Counties (NJAC), and the New Jersey Municipal Managers Association (NJMMA) are urging municipalities and counties to remain in contact with the Governor’s Office and their respective legislative delegations on the topic. The SHBC has yet to set a date when it will make a final decision on the proposed substantial rate increases. Thank you, as always, for your time and consideration, and we’ll make sure to keep you posted on any new developments.
Contact: Lori Buckelew, Deputy Executive Director, lbuckelew@njlm.org or 609-695-3481 ext. 112.
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