Assemblyman Andrew Macurdy announced comprehensive new legislation today aimed at one of the hidden drivers of rising property taxes in New Jersey: the soaring cost of health care under the state-run insurance plans that cover many municipal workers and public school employees.

New Jersey’s state health insurance plans are in crisis. Rates rise by double digits year after year, putting pressure on municipal and school district budgets that ultimately results in higher property taxes. The status quo is unsustainable, and represents one of the most intractable problems facing New Jersey’s government today. Without reform, prices will continue to spiral out of control until the plans collapse. Recent reports by the State Treasurer have indicated that both the municipal worker and the public school employee plans face spiraling costs that will likely lead to collapse in the absence of state action.  That scenario would have a devastating impact on the covered employees, municipalities, school districts, and property taxpayers.

Macurdy’s bill, the Property Tax Relief Act, is a comprehensive reform proposal for the State Health Benefits Plan (municipal workers) and the State Educators Health Benefits Plan (public school employees). The legislation contains three parts that will collectively work to stabilize costs while protecting high-quality healthcare for covered employees.

The first prong would help rein in costs for a set of routine, high-volume medical procedures by capping the prices charged by providers at a reference price tied to federal Medicare rates. The goal is to prevent public employers from overpaying for services where prices vary widely with little evidence of better outcomes. Other states that have implemented similar programs, like Oregon, have seen millions in cost savings. The reference price in Assemblyman Macurdy’s bill would apply to procedures and services including knee and hip replacements, MRIs, and CT scans. Certain providers would be exempt from the bill’s provisions, including rural, critical access, and financially distressed hospitals under a state monitor.

The second prong would prevent the state plans from being revolving doors of public employers switching between the SHBP or SEHBP and private plans or self-insurance. By requiring a reasonable three year waiting period for employers to leave or return to a plan, the proposal would help stabilize the base of the plans and thereby control costs.

The third prong addresses the governance stalemate of the state plans. By statute, these state insurance plans have been controlled for years by committees that are at a consistent stalemate and unable to coordinate plan changes to address the evolving landscape. Assemblyman Macurdy’s proposal would turn governance over to the health benefits commissions for the respective plans in order to break the logjam, while setting a floor for plan benefits at the gold-level of 85 percent actuarial value.  The legislation thus creates the flexibility for updates but also ensures high-quality coverage for workers.

“Going door-to-door in my district over the past year, the number one issue I hear from residents is property taxes,” Assemblyman Macurdy said.  “We need solutions to the root causes driving increased property taxes, not band aids.  This bill provides a structural, comprehensive, and pragmatic fix to what is a very difficult problem facing our state—the unsustainable rise of healthcare costs for municipal workers and public school teachers.  By achieving savings across different aspects of the system, we can begin to ease the pressure on municipal and school budgets that is contributing to higher property taxes.”

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Before becoming a member of the State Assembly in District 21 representing parts of Middlesex, Morris, Somerset, and Union Counties, Andrew Macurdy served as a federal prosecutor in Newark and a county prosecutor in Jersey City. At the Attorney General’s Office, he worked on public safety initiatives related to gun violence and auto theft, as well as designing and building the Arrive Together program, which pairs mental health workers with law enforcement officers to jointly respond to mental health crisis calls for service and currently operates in municipalities around the state.  Macurdy’s Assembly Office website is assemblymanandrewmacurdy.com