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March 24, 2011

Re:      S-2718, Health Benefits Reform

Dear Mayor:

We recently met with Senate President Sweeney’s office to discuss our concerns with S-2718, which would establish certain criteria for public employee health care benefits and require premium percentage based employee contribution.  We have previously provided a summary of S-2718 in our March 8th Dear Mayor letter.

We have long advocated for and strongly support employees contributing to their health benefits.  As employee health benefit costs are one of the driving factors of high personnel cost, something must be done.  However, we do have concerns with S-2718 as currently written.

The bill requires that each municipality, regardless of their delivery of their health benefits, establish an Employee Quality, Cost and Delivery (EQCD) Committee.  The Committee would be comprised of two elected officials, the Chief Financial Officer, the Business Administrator, the Purchasing Agent and one member of each labor and bargaining group.  The EQCD Committee would be responsible for:

  • Working cooperatively in evaluating health benefits vendors and options for employees health benefits coverage
  • Designing and developing the options for employee health care benefits coverage and selecting vendors best able to provide that coverage at lowest cost for employers in accordance with applicable contract laws
  • Negotiating contracts for health care benefits coverage with the selected vendors on behalf of the Board of Education and recommending those contracts to the board education for approval in accordance with applicable contracting laws
  • Devising strategies for continued safety, health and wellness of employees

We expressed our numerous concerns about this mandated committee.  Specifically, we are concerned that the committee will usurp the collective bargaining process, that the municipality could be liable for the committee actions, and that the committee could be violating various laws such as labor, discrimination and HIPPA. We are also concerned about the practical issues of the committee especially for those municipalities in the State Health Benefits Program. 

We also expressed our concern about a number of provisions that will place mandates on municipalities and could lead to State mandate-State pay issues.  For instance, there is a requirement that municipalities that do not participate in the State Health Benefits plan will have to offer a choice of five different health care plans or level of coverage and out of pocket; their plans would be required to be certified by the Division of Pension and Benefits; and be required to use cooperative purchasing for the purchase of prescription drugs and pharmacy benefits management services.

We also expressed our concern with the provision that once the bill is signed municipalities who are not in the State Health Benefits Program will no longer be able to join. We suggested as an alternative that municipalities who join the State Health Benefits Program be required to give a commitment, such as 3 or 5 years, to stay in the State Health Benefits Program.

Finally, we addressed our technical concerns with the bill.  The bill needs to add rulemaking ability to address issues that will arise with the implementation of S-2718.  In addition we believe that clearer language is needed on the impact of the bill on current collective bargaining agreements and employment contracts.  Finally, the effective date of the bill should be changed from immediate to address the implementation of the requirements of S-2718.

The meeting was substantive and we are optimistic that our concerns will be addressed.  We applaud Senate President Sweeney for keeping this issue on the front burner.  Although we are still negotiating with him, we would encourage you to contact your Senator, Assembly representatives and Governor to urge them to work in a collaborative fashion to develop legislation which can be implemented before the summer legislative break.

We are looking forward to continuing to work with Senate President Sweeney and have reached out to Senator Beck, the co-sponsor, and the Governor’s office to discuss our concerns.

If you have any questions or need additional information please contact Lori Buckelew at lbuckelew@njslom.com or 609-695-3481 x112.

Very truly yours,

 

Eldridge Hawkins, Jr.                                Wilda Diaz
Mayor, City of Orange                               Mayor, City of Perth Amboy
Chair, Management Reform Committee       Deputy Chair, Management Reform Committee

 

William G. Dressel, Jr.
Executive Director

 

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