State aims to cut public employees' medical plan Thursday, August 10, 2006 • BY DUNSTAN McNICHOL AND JOSEPH DONOHUE • Star-Ledger Staff Thousands of teachers, government workers and their families would face higher costs for prescription drugs and medical services under a state cost-cutting plan unveiled yesterday, the same day lawmakers began to debate ways to rein in public employee benefits. The proposed changes in medical costs would affect many of the 220,000 local government employees and teachers, plus family members, covered by the State Health Benefits Plan. It would save state and local governments about $74 million in a program slated to cost nearly $4 billion overall this year. Under the proposal by the state Division of Pension and Benefits, workers would see the $5 co-pay for doctor's office visits double to $10, and a $5 co-payment on brand-name drugs rise to as much as $15 on Jan. 1. Effective Oct. 1, retirees and active employees in the health benefits program also would be required to purchase generic rather than brand-name prescriptions in most cases, or pay the difference themselves, and would have to use mail-order prescription services. The proposal, presented yesterday to the commission that oversees the program, rankled union representatives, who said the current benefits are called for by the workers' contracts. "I guess we're wondering why this would be here at the commission at this point when it seems more appropriate this would be a subject of contractual negotiations," said Dudley Burge, treasurer for Communications Workers America Local 1032. Representatives of the AFL-CIO and the New Jersey Education Association who serve on the commission, which is scheduled to vote on the proposed changes Tuesday, also balked at them. But an actuary who presented the state proposal to the commission said the current health package is extremely generous by any standard. "If you were to compare New Jersey's benefits to other states, it's very rich," said Susan Marsh, vice president and consulting actuary for Aon Consulting. "If you compare it with other employers in New Jersey, it's very, very rich." The state budget this year includes $2.1 billion for the health program payments, and local governments pay in about $1.8 billion more. Without changes, the state's portion alone would rise to $3.6 billion by 2010, Fred Beaver, director of the state Division of Pensions and Benefits, told a legislative committee yesterday. Including pension contributions, which the state makes on behalf of state workers and teachers, the entire state bill for benefits will rise to $6.3 billion by 2010, nearly twice the current tab, he said. Beaver was testifying at the first meeting of the Joint Legislative Committee on Public Employee Benefits Reform, one of four special panels the Legislature has set up in a push to control government costs and reduce property taxes. The committees are to present recommendations by Nov. 15. "I will be blunt: The pensions and benefits system in New Jersey is broken," said Sen. Nicholas Scutari (D-Union), co-chairman of the committee. "Our costs are out of control, and our liabilities are skyrocketing." About 100 unionized state workers packed the Legislature's committee meeting room along with several lobbyists. Union leaders vowed to bargain hard this fall and next year to protect current benefits. Four-year salary pacts with most state worker expire June 30. "We can't solve the state's problems solely on the backs of our members," said Chris Shelton, vice president of Communications Workers of America District 1, who will be negotiating for his union. Though contract talks have not yet begun, Gov. Jon Corzine, who is on vacation in Italy, has said he would like to start them in September. Sen. William Gormley (R-Atlantic) said negotiations should take place quickly so that future fringe benefit costs can be determined. "We can't wait for the spring. We really have to know what the benefits package is now," Gormley said. Shelton had a blunt reply: "We bargain with the governor's office, not the Legislature," he said. © 2006 The Star-Ledger. Used by NJ.com with permission.