Christie claims he’s found $250M in state health savings, but Democrats not so sure
Democratic lawmakers tell the Christie administration they’re uncomfortable about counting on a quarter-billion dollars in savings from not-yet-specified changes to public workers’ health plans.
Two panels appointed by the unions and the administration have already changed the health plans in ways projected to save $197 million in the coming year, but Gov. Chris Christie’s $34.8 billion budget counts on additional changes to save the state $250 million on top of that.
Acting Treasurer Ford Scudder said the projection roughly equates to the total growth in spending on healthcare for public workers and retirees that otherwise would have been in the budget. He said there are a variety of options for getting there, none of which are formally proposed, and noted the Pension and Health Benefit Study Commission identified $2 billion in annual savings in a February report.
“We’re reaching one-eighth of that, by just purely stripping out the most wasteful spending within the system that doesn’t affect quality of care, but solely spending we thought to be eminently reasonable,” Scudder said Wednesday. "So I think we came at the number from a number of different ways and through all of them found the number to be reasonable and achievable.”
That’s not specific enough, said Assemblyman Gary Schaer, D-Passaic, who chairs the Assembly Budget Committee. He said any number between $100 million and $500 million could have been dropped into the budget if no justification is needed.
“This is the budget committee. We need to deal with numbers. We need to deal with more than just assumptions but prognostications based on factual analyses and documents,” Schaer said.
Christie’s budget says the savings will come from changes such as more use of generic drugs, modest increase in copays to discourage unnecessary medical visits and new delivery methods for primary care.
Acting Treasurer Ford Scudder provided few additional details in two days of testimony to the Senate and Assembly budget committees, though he did say the increased copays would be for things like using the emergency room when an admittance isn’t needed and an urgent care center would have sufficed.
There are two health plan-design committees, one for school employees and one for other public workers. Both consist of equal numbers of appointees from the administration and public-sector unions.
Schaer said that balance “suggests compromise will at best be difficult and fleeting,” but Scudder said workers share in any savings through lower premiums.
“We believe that the plan-design committees will still want to work together to find those savings because those savings accrue not just to state and local government but also to the members who on average are paying approximately 20 percent of their premiums, 18 to 20 percent of their premiums," Scudder said.
“It’s really been an open dialogue. There’s been an exchange of ideas between the committees, particularly on the state side this point,” said David Ridolfino, director of the Office of Management and Budget and a member of both committees. “We’ve had ideas – perhaps reductions in certain copays, drug formularies, things like that. Perhaps savings in the PBM contract. It’s really been a broad range of discussion up to this point.”
Schaer remained skeptical.
“It seems to me that the government of New Jersey, legislative and executive, whatever, is depending upon $250 million to be found,” he said.
The Office of Legislative Services identified the $250 million as one in a series of uncertainties facing Christie’s budget plan, along with the reported move to Florida of New Jersey’s wealthiest resident, 17 audits being done by the federal government of Medicaid spending and other items.
If the $250 milion is budgeted but doesn’t happen, the money would then come from the state’s $790 million surplus, said Frank Haines, the legislative budget and finance officer. At 2.3 percent of spending, the surplus is the largest it has been in years but still less than half of what would be considered healthy.
“If those savings do not materialize during the fiscal year, and spending for health benefits followed a higher cost curve, then surplus would be the ultimate default,” Haines said.
Sen. Paul Sarlo, D-Bergen, called the $250 million from healthcare savings “another placeholder in the budget,” similar to the $1.6 billion that’s listed in the budget even though no funding source has been identified as of yet.
The Transportation Trust Fund spending is considered “off-budget” and isn’t part of the $34.8 billion spending plan.
Michael Symons has covered the Statehouse since 2000. He can be reached at email@example.com or @MichaelSymons_ on Twitter.