Report: N.J. towns could save millions on insurance
New Jersey towns and counties could save more than $100 million a year on health insurance costs if they joined the state insurance pool, according to a New Jersey Comptroller's report released today.
The report examined four representative contracts - Essex County, Brick Township, East Brunswick Township and Haddon Township - and found they could have saved a collective $12.5 million in 2009 and 2010 if they had joined the pool.
"Too many public entities in New Jersey are not taking basic steps to ensure that they are getting the best deal," State Comptroller Matthew Boxer said in a statement. "Health insurance costs are a significant part of the property tax picture in New Jersey and all coverage options should be evaluated."
The State Health Benefits Program, which provides coverage for more than 850,000 government workers, is designed to give municipalities a better deal on health insurance through the sheer size of the program.
Only about one third of New Jersey's counties and two-thirds of its towns and cities presently participate, according to the comptroller's office.
For years, critics of the pool, including State Senate President Stephen Sweeney (D., Gloucester), have maintained that the program is not as cheap as advertised and is prone to rate fluctuations - a position the comptroller dismissed.
The report singles out the lack of incentive of insurance brokers to recommend that their clients join the state pool; one unidentified broker told the state as much.
Essex County paid Conner Strong & Buckelew, the insurance brokerage owned by South Jersey Democratic power broker George E. Norcross III, $756,450 in consulting fees in 2009 and 2010, according to the comptroller's office.
"We found specifically that the use of insurance brokers by (local governments) contributed to additional costs in providing health-care coverage," the report said.
Conner Strong released a statement Tuesday taking issue with that analysis and said it had recently recommended to two of its clients - Camden and Gloucester Counties - to join the state insurance pool.
"Our obligation has and continues to be to provide the best, most objective advice to our clients no matter its impact to our firm," the statement said.
The report also cited Brick's insurance broker, Belleville-based Insurance Management & Consulting, for violating the state's pay-to-play laws when it donated $1,700 to the campaigns of the town's mayor and council members in 2009.
The company did not immediately return a phone call for comment.
The comptroller's report recommends that all muncipalities consider switching to the state insurance pool and when dealing with brokers, to avoid a commission-based compensation.
The process of comparing insurance plans is notoriously complex, involving the weighing of infinite factors such as co-pays and physician availability. In addition, municipalites must negotiate with unions, for whom benefits are often a sticking point.
East Brunswick chief financial officer L. Mason Neely noted in a response to the comptroller that the report "fails to note that the benefits offered by the (state pool) are different and of lesser quality . . . than those mandated" by the union contracts.
Contact staff writer James Osborne at 856-779-3876 or email@example.com.