On Wednesday, the State Health Benefits Commission (SHBC) held its regularly scheduled March meeting.
Representatives from AON presented the Mid-Year Report, however, they did not present rates for 2026 and indicated that they will be released sometime this summer.
According to the Mid-Year Report, based on mid-year results, which had higher medical and prescription drug experience trends, combined with expected future trend increases, they anticipate a premium increase for 2026 to be in the double digits. In addition, to bring the local government plan’s claim stabilization reserve, which is two months of funding, to the two-month target level the premium would need to 19.5% higher.
If you recall, P.L. 2024, c. 86 permits the Division of Pensions Director to transfer of funds from the State Employee Group State Health Benefits Plan (SHBP) to the Local Government Employee Group SHBP when the funding level for the Local Government Employee Group SHBP fell to a level that is insufficient to cover 10 days of anticipated payments. According to AON, the Claim Stabilization Reserve balance as of December 31, 2025 is projected to be -$64 million or –0.4 months of plan cost. To reach the two-month target 2025 premiums would need to be 19.5% higher.
The cost drivers for the SHBP Local Government Employee Group include increase in total medical claims of 9.8%, including 4.2% increase in utilization and higher increases in specialist professional visits compared to State Employee. The cost drivers of outpatient cost increases are outpatient surgery and ER cost per service. The cost drivers of professional services are utilization and cost per service of specialist and behavioral health as well as radiology increases due to the elimination of eviCore.
SHBP Local Government Group Prescription cost drivers are inflammatory conditions, diabetes, and weight loss drugs. Diabetes related drugs increased 9%, weight loss related drugs increased 100% and account for 15% of the total plan paid.
In discussing cost saving alternatives, the SHBC did refer to enacting a proposal to impose conditions requiring local governments to remain in the SHBP for at least 5 years to decrease antiselection from local government employers. It was suggested that the proposal should be for discussions at the SHBC Plan Design Committee meeting.
The next scheduled SHBC meeting is May 14, 2025, and the rate renewal meeting is scheduled for July 9 and July 28.
Contacts: Lori Buckelew, Deputy Executive Director, lbuckelew@njlm.org, 609-695-3481, x112 and Erin Knoedler, Legislative Analyst, eknoedler@njlm.org, x116.