State and union officials have to find major cuts to New Jersey’s public employee health program, and analyses released Wednesday from the state’s actuary found that increasing the portion of costs shouldered by workers offers the most savings of proposed solutions.
The Legislature required the cut as state health plans face increases in premiums, inflation, and uncertainty. This year’s state budget requires a $100 million cut in the first six months of 2026; state government and labor officials submitted their proposals for cuts at the end of last month. Aon, the firm serving as the State Health Benefit Program’s actuary, released its analyses of the proposals on Wednesday.
The state’s most significant proposals would have state workers pay more out of pocket. Under existing plans, state employees pay between 2% and 7% of medical spending; the new proposals would bump those figures up to between 6% and 12%.
Aon said it couldn’t estimate savings for most of labor’s proposals, often due to a lack of information, a lack of time, or the fact that some proposals fell outside its purview. Some proposals, like a proposed incentive for workers to switch to a less expensive plan, did not come close to cutting the $200 million in annualized savings that are needed. Aon’s findings effectively put a number on the plethora of proposals, allowing for a final decision on how cuts are achieved.
The Plan Design Committee, split evenly between state and union officials, is slated to vote on the proposals next week. If the parties reach a deal, cuts can be solidified as soon as then. If disagreement and stalemate continue through September, the decision falls to state legislators. If Trenton lawmakers fail to pass a bill by Dec. 1, the tiebreaking decision falls to the nonpartisan Office of Legislative Services.
The committee can select any combination of proposals to reach the needed level of cuts. Other proposals include changes in how GLP-1 weight loss drugs are covered — Aon said a complete removal of coverage for GLP-1 drugs would save $48 million per year.
“We appreciate the plan actuary’s analysis of both the State and Labor’s savings proposals and look forward to continuing our work with all parties to reach an agreement,” said Tyler Jones, a spokesperson for Gov. Phil Murphy’s office.
The Communications Workers of America, which represents many public workers in the Garden State, criticized the findings. Billy Gallagher, an assistant to the vice president at CWA District 1, said Aon failed to properly gauge the potential savings of labor’s proposals.
“This report should come as a surprise to no one—but it should anger every single taxpayer in the State of New Jersey,” Gallagher said. “The current Administration and Legislative leadership have, at various times, tacitly allowed this affordability crisis to spiral out of control, or been the outright drivers of it, so it’s no surprise that the actuary hand-picked by the State would sign off on their own recommendations, ignoring or outright attempting to discredit good-faith proposals we’ve made to put a stop to this.”
The cuts threaten to open a rift between state employee unions and Democrats in an election year, as hinted at by Gallagher.
“The State Health Benefits Plan covers 400,000 workers, retirees, and their family-members who will be heading to the ballot box later this year and will be making some tough decisions about who they elect to lead this state following an administration that has allowed hospital systems and insurance companies to run rampant while working families bear the brunt,” he said. “We need elected leaders in this state who will stand with us instead of undermine and work against us, and who will truly dedicate themselves to coming to solutions that don’t result in costs continuing to pile on taxpayers.”
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