A Cost Crisis Hits New Jersey's Public Workers
New Jersey's public employees woke to grim news this week. Actuary AON recommended staggering premium increases for 2026: 36.5 percent for local government workers, 29.7 percent for school employees, and 21 percent for state workers. These hikes, driven by skyrocketing prescription drug costs and medical inflation, threaten the financial stability of teachers, firefighters, and other public servants who keep the state running. The numbers are daunting, but the human toll is even more concerning.
For the 800,000 people covered by the State Health Benefits Program and School Employees' Health Benefits Program, these increases could mean higher out-of-pocket costs or reduced benefits. Families already stretched thin might struggle to afford care. The state's response will shape budgets and lives. This crisis calls for solutions that prioritize workers and ensure access to quality health care for all.
Why Costs Are Spiraling Out of Control
The roots of this crisis lie in systemic issues plaguing health care nationwide. Prescription drug costs, especially for GLP-1 medications like Wegovy and Ozempic, have surged, with annual per-member costs exceeding $10,000. These drugs, vital for managing diabetes and obesity, now top spending in all three plans. Meanwhile, medical inflation and increased use of complex care drive up expenses. Over the past five years, premiums for local government plans have more than doubled, far outpacing other public employee plans.
Prior-year losses add fuel to the fire. In 2024 and 2025, the state plan lost $386 million, local government plans $132 million, and school plans a staggering $397 million. Depleted reserves and employers with lower-risk workers exiting the plans worsen the problem. These trends reflect a health care system where pharmaceutical companies and providers hold too much pricing power. The problem stems from systemic issues, not primarily from worker overuse.
Protecting Workers From Systemic Failures
Public employees, from teachers to police officers, deserve better than bearing the brunt of these cost spikes. Generous health benefits attract and retain talent, reducing turnover and ensuring strong public services. Studies show that robust benefits correlate with lower employee churn, saving costs in the long run. Cutting coverage or shifting costs onto workers risks breaking trust with unions and could spark labor disputes, especially among lower-wage school staff already squeezed by rising living costs.
The state's collective-bargaining agreements protect workers from unilateral benefit cuts, and for good reason. Higher contributions or leaner plans would hit hardest those least able to afford it, like cafeteria workers or early-career teachers. Instead of penalizing employees, New Jersey can address the real culprits: unchecked drug prices and a fragmented health care system that prioritizes profits.
Solutions That Put People First
New Jersey has tools to address this crisis without harming workers. Capping drug prices through state purchasing coalitions could rein in the cost of high-priced medications like GLP-1 drugs. A 2025 law targeting pharmacy benefit manager transparency is a start, exposing hidden markups that inflate costs. Expanding these efforts to negotiate directly with manufacturers would deliver savings while preserving access to critical treatments.
Investing in preventive care and chronic disease management offers another path. By helping workers manage conditions like diabetes early, the state can reduce reliance on costly drugs and hospital visits. Broadening the risk pool by requiring local employers to stay in the plans would stabilize costs, preventing healthier groups from exiting and leaving higher-risk workers behind. These steps align with a vision of health care as a fundamental right.
A Bigger Vision for Health Care
Short-term fixes alone will not solve the problem. New Jersey can explore a statewide public option, allowing public plans to compete with private insurers and drive down costs through greater bargaining power. National studies suggest public options could reduce premiums by 10-15 percent while maintaining quality. Over time, moving toward a single-payer model could eliminate profiteering and ensure equitable care for all residents, including public workers.
State funding also plays a role. One-time infusions to rebuild reserves, as proposed by Governor Phil Murphy, could ease immediate pressure. Since 2022, state subsidies have covered only a fraction of cost spikes, leaving workers and taxpayers to fill the gap. A fairer tax structure, targeting high-income earners or corporate profits, could fund these investments without raising property taxes, which hit working families hardest.
Protecting Workers, Securing the Future
New Jersey stands at a crossroads. The proposed premium hikes signal a health care system in distress, but they also offer a chance to rethink priorities. Public workers, who educate children and keep communities safe, are central to any solution. By curbing drug costs, investing in prevention, and exploring bold reforms like a public option, the state can protect employees and stabilize plans.
Taxpayers, too, deserve relief. Solutions that control costs without slashing benefits will prevent property tax hikes that strain municipal budgets. The Health Benefits Commissions, tasked with finalizing these rates, should weigh the needs of workers, employers, and residents. Transparent, data-driven decisions will build trust and pave the way for lasting change.
This crisis tests New Jersey's commitment to its people. By choosing fairness over short-term cuts, the state can ensure that every worker has access to the care they need. The path forward lies in bold action, rooted in the belief that health care is a shared responsibility and a cornerstone of a just society.