Sweeney health plan would save $206 million after 7 years

A health benefits reform bill introduced by Senate President Steve Sweeney would save the state $206.2 million once it is fully phased in, according to an analysis of the bill by the Office of Legislative Services.

Sweeney’s bill would require state and local government workers to pay a larger portion of their health benefits premiums and would base the contribution on the cost of the premium rather than on the employee’s salary as is currently the case. 

Sweeney’s plan has a seven-year phase-in and is tiered so that employees making larger salaries pay more for benefits. Based on the phase-in, the plan would save just $21.8 million in the first year.  The OLS review covered only state employees and does not factor in local government workers, who would also be covered by Sweeney’s bill.  While the local savings would not effect state savings it will have a positive impact on local property tax bills.

“While we await OLS completing its research, one thing is already very clear: the Senate President’s plan will mean immediate savings for property taxpayers,” said Senate Democratic Spokesman Derek Roseman.

The phase-in would require employees making up to $29,999 to start out paying 6 percent of their salary for single coverage.  The contributions would rise to 12 percent in the fourth year and every year thereafter.

An employee making between $30,000 and $49,999 would start out paying 10 percent of the premium cost in the first year and 16 percent in the fourth year and on.  Employees earning between $50,000 and $74,999 would pay 13 percent in the first year and 19 percent in the fourth year and after.  An employee earning between $75,000 and $99,999 would pay 18 percent of the premium cost in the first year and 27 percent in the fourth year and beyond and employees earning more than $100,000 would pay 21 percent to start and 30 percent in the fourth year and beyond.

The OLS study assumes that all salary and benefits data remain the same throughout the life of the bill.

While Sweeney’s plan is the only one currently on the table, Gov. Chris Christie has said he would like to see employees pay premiums more in line with the private sector.  As part of his budget speech Christie pushed for his plan, which would require all government employees to pay 30 percent of their premiums regardless of their income levels.

According to the Office of Legislative Services, Christie’s plan would save the state $346.8 million per year.

The relatively light savings from Sweeney’s plan could present a problem for the administration, which has pledged to boost the Homestead Tax Credit by $189 million, using savings from benefits reform.  But Sweeney’s plan will not provide enough in savings to increase the rebate. 

What’s more, Christie has already factored $323 million in savings from his plan into the Fiscal Year 2012 budget.  If Sweeney’s plan passes as is, the state would be short about $110 million in revenue already factored into the budget.

The governor’s press office issued a statement about the savings in Sweeney’s plan: “We feel that Senator Sweeney’s plan is a good start but Governor Christie’s plan goes further to address the costs and imbalances in the system that will drag it down if we don’t enact meaningful reform.  We continue working with the Senate President on this and other important reforms.”

Sweeney health plan would save $206 million after 7 years