The Ozempic effect? Soaring drug costs could hammer NJ workers’ health plans

💊 Skyrocketing use of pricey GLP-1 weight-loss drugs like Ozempic-type medications is driving huge increases in prescription costs for NJ public worker health plans.
📈 Officials warn double-digit premium increases could be coming for hundreds of thousands of state, school and local government employees.
⚠️ Local government workers may face the steepest increases as the state warns the system could become financially unsustainable.

NJ public workers face likely double-digit health premium hikes

Hundreds of thousands of public workers in New Jersey could soon face double-digit increases in health insurance premiums as state officials warn that rising medical and prescription drug costs are threatening the stability of the state’s health benefits systems.

Actuaries reviewing the State Health Benefits Program and the School Employees’ Health Benefits Program say significant premium hikes appear likely when new rates are finalized later this year. Those programs cover roughly 800,000 people, including state workers, teachers, retirees and their families.

One of the biggest drivers: explosive growth in the use of GLP-1 drugs used for diabetes and weight loss.

These medications — including drugs similar to Ozempic and Wegovy — can cost more than $1,000 per month. Their growing popularity among patients has dramatically increased prescription drug spending in public employee plans.

Actuarial reports show prescription drug claims are rising sharply, with high utilization of GLP-1 medications and other specialty drugs pushing pharmacy costs significantly higher. In some analyses, the average amount paid by plans for prescription drugs has jumped more than 20% compared with prior projections.

Medical inflation and rising utilization worsening the problem

State officials say the cost surge isn’t driven by one factor alone.

Medical claims are rising as workers and retirees use more health services, while hospitals and providers continue raising prices. At the same time, the mix of drugs being prescribed has shifted toward newer and more expensive medications.

New Jersey already spends billions each year covering health benefits for public employees and retirees. The state’s latest budget allocates about $4.6 billion for those costs, reflecting an increase of more than $350 million in a single year.

Local government workers could face the steepest increases

The outlook may be even more troubling for local government workers.

Analysts warn that the portion of the state health benefits system covering municipal and county employees could see particularly steep increases because its membership tends to be older and more expensive to insure.

Actuaries have previously projected potential premium increases far above the statewide average in that segment of the program if cost trends continue.

State officials warn that without structural changes to control spending — including potential benefit redesigns and higher cost-sharing — public worker health plans could face continuing financial pressure in the years ahead.

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