Explainer: Platinum Versus Gold Health-Insurance Plans For NJ Public Workers

Bipartisan panel suggests going to less expensive health insurance could save taxpayers $1.4 billion within a few years

Proposals to trim healthcare benefits for New Jersey’s massive public workforce are again a topic for debate, thanks to recommendations from a bipartisan panel assembled by Senate President Steve Sweeney to tackle some of the state’s largest fiscal woes.

Among the central proposals of the reforms is shifting to a less expensive health insurance package — from the current “platinum” level to gold” coverage — a proposal that supporters said could save taxpayers some $1.4 billion in costs over the next four years.

These types of changes have been discussed in the past, including by a group convened by former Gov. Chris Christie, a Republican, which in February 2016 issued a reform package with some similar proposals — many of which were never implemented.

New Jersey’s public workers — roughly 700,000 state employees, plus county, local and school-district staff — have the richest government benefits in the nation, according to the Sweeney panel; in the current fiscal year, $3.4 billion in taxpayer dollars are allocated to these costs. The new report, “Path to Progress,” says these costs are expected to grow at nearly 5 percent a year, or $700 million over four years.

The cost of these benefits, and New Jersey’s grossly underfunded pension system, have long been top concerns for public officials. But cutting these costs usually involves clashes with the state’s strong public labor unions, including the New Jersey Education Association, which is locked in a battle with Sweeney (D-Gloucester), the state’s most powerful lawmaker. As a result, major changes have been hard to implement.

State to audit certain health-benefit claims

That said, officials on both sides note that a joint effort, involving Sweeney and union leaders, including the Communications Workers of America, to reduce the cost of healthcare benefits to the state and its workers has started to have an impact. Changes to plans, implemented in recent years, are expected to deliver some $1.6 billion in savings, and a pilot project to encourage patient-centered care —with no copays — is becoming accessible to public workers.

Last month, state Treasurer Elizabeth Maher Muoio outlined the administration’s plan to save some $200 million by auditing certain health-benefits claims, including those filed by state workers in certain plans. Other savings could also come from plan changes to tweak copayments and expand the use of generic drugs, she noted.

But Sweeney’s panel — led by Sens. Paul Sarlo (D-Bergen) and Steve Oroho (R-Sussex), and made up of Cabinet officials, professors, economists and other experts — insisted more must be done to tackle this aspect of the state’s financial crisis.

Trying to persuade New Jerseyans

Sweeney told NJ Spotlight earlier this week that he and his colleagues will take the rest of the summer to educate the public about these potential reforms through meetings with the media, public officials, and professional groups; in addition to pension and benefit reform, their report addresses educational system changes, county and municipal reforms, tweaks to the tax system, and public assets — like highways and water systems — that could be leveraged to raise new funds or stabilize the pension system.

Some of these changes will require legislative changes, Sweeney said, and others — including some of the health-benefit reforms — can be done through contract changes, once the current agreements expire next year. That would require negotiations with the unions, who have opposed many of the reforms in the past.

The focus of the panel’s proposed health-benefit reforms involves shifting from the current platinum-rated plans to those that are considered gold-level policies; these descriptions reflect the “metal” level ratings assigned to plans sold through the Affordable Care Act marketplace, to individuals who are not covered through their job and earn too much to qualify for Medicaid. Marketplace plans are also available in bronze and silver levels, something Sweeney’s group said the state should also consider for government employees.

Platinum plans are the most expensive

While the public-worker plans are not actually sold through the ACA marketplace, the same descriptions are used to illustrate their value. According to the federal government, which oversees these ratings, these terms indicate how the coverage is paid, not the quality of care available. (In many cases, the same doctors are accessible through all plans.)

With a bronze plan, the insurance company pays an average of 60 percent of the cost of claims, while the consumer must cover 40 percent; silver plans split these expenses 70 percent to 30 percent; and gold plans divide the cost 80 percent to 20 percent. With a platinum plan, 90 percent of the cost of a claim goes to the insurance company, and only 10 percent to the patient. (Plans can also differ greatly within each metal category, involving different combinations of copays, deductibles, and premiums.)

When it comes to annual outlays, the “lesser” metal plans cost significantly less overall than those that offer more robust protection. Bronze and silver plans are recommended for individuals with fewer health needs, or lower medical expenses, and who want to control their monthly costs; gold plans have a high monthly premium, but make sense if you have significant healthcare requirements. Platinum plans have the highest monthly cost overall, but cover much more care.

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