AG Seeks to Compel SEHBP Labor Members to Attend Health Benefits Meetings

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The State Attorney General filed a request in state Superior Court earlier this week seeking to compel members of the School Employees’ Health Benefits Program Commission who are appointed by the New Jersey Education Association (NJEA) to attend meetings of the health benefits commission.  The three labor representatives haven’t shown up to the past two meetings because of a disagreement over the body’s authority to make substantive changes to health benefits.  The commission has not been able to make quorum in light of the representatives’ absence.


P.L. 2011 Chapter 78 made significant changes to school employees’ pensions and health benefits.  One of the protections for members under this law was the creation of the School Employees’ Health Benefit Plan Design Committee.  The Committee took over the role of benefit review for ALL plans offered in the SEHBP from the School Employees Health Benefits Commission.   The law included a requirement of equal representation of labor and management on the committee (3 union representatives and 3 state/management representatives).

After the passage of Chapter 78, any benefit modification would have to be approved by the Committee.  The six members of the Committee meet approximately once a month to discuss proposals.  The role of the Committee, according to P.L. 2011 Chapter 78, is as follows:

“The committee shall have the responsibility for and authority over the various plans and components of those plans, including for medical benefits, prescription benefits, dental, vision, and any other health care benefits, offered and administered by the program. The committee shall have the authority to create, modify, or terminate any plan or component, at its sole discretion. Any reference in law to the School Employees’ Health Benefits Commission in the context of the creation, modification, or termination of a plan or plan component shall be deemed to apply to the committee.”

Current Issue

Recently, the state representatives proposed moving eligible retired members receiving healthcare from the SEHBP from their current retiree health benefit program to a Medicare Advantage program. Currently 12% of retired members already selected a Medicare Advantage program through Aetna so they would see little to no change in their benefit.  But the 88% that chose Medicare as their primary insurance (with Horizon supplementing that coverage) would be forced into a Medicare Advantage program. 

According to The Henry J. Kaiser Family Foundation, the percentage of former State of New Jersey enrollees in Medicare Advantage (as part of the total Medicare population) is around 15%.   The three union representatives have declined to accept this proposal until they have the ability to do a thorough analysis of the plan and determine if such a change would be in the best interests of retired members.

Since the Plan Design Committee needs a majority of its members to implement any change, at least one union representative would have to vote with the state representatives to mandate this change.  The Governor is calling on the Commission to decide the matter.

The Commission is composed of nine members: four union representatives and five executive branch representatives, but a spot on the panel for an AFL-CIO member has been vacant since last year. The chair position is also vacant because the current members have not been able to agree on who they would like to recommend.  The only way to fill the union representative seat is through the Office of Appointments in the Governor’s office.  Names have been provided but no action has been forthcoming from the Administration.

The Administration’s position is that the Medicare Advantage change is a contractual change, so the authority rests with the Commission.  He also argues that the union representatives haven’t shown up because they don’t want to trim $250 million from the health care costs of teachers and state workers that he has demanded.  The Christie administration said that shifting retired members of the state plan into Medicare Advantage plans could save the state around $47 million.

The union argues that he is attempting to effectuate the change through the commission because he currently holds a majority there.

Regardless of intent, past precedent is instructive here.  Unfortunately, this is not the first time the State has tried to bypass the design committee.  In 2015, the State unilaterally imposed higher retiree prescription co-pays when an agreement could not be reached at the Design Committee level.  Ultimately the New Jersey Superior Court Appellate Division ruled in favor of the unions and said that the State had no authority to impose higher co-pays and the matter should be addressed by the Design Committee.

In light of this, NJPSA has also expressed concern with the process, urging the appointments be made as soon as possible and that the Committee, not the Commission, review the proposal.

The complaint, filed in Mercer County on behalf of the state Treasury Department, names NJEA representatives Wendell Steinhauer, Kevin Kelleher and Carmen Gonzalez-Gannon.  It compels the NJEA members to provide a list of dates between September 8 and September 15 to attend meetings. If the members don’t attend, the order requests that “the Commission may meet and take action … without a quorum.”

The School Employees’ Health Benefits Commission webpage stated the following:

School Employees’ Health Benefits Commission: The State has brought an order to show cause seeking to compel Commission members to give their dates of availability for a meeting between and including 8th -15th of September. Four Commissioners are available as of the submission of this notice; we have not heard from the other three, who are defendants in the suit. If the court grants the order and one of the other 3 Commission members is available on 8th or 9th of Sept., the Commission will have a quorum and will hold a special meeting on one of those dates.

In response to the complaint, NJEA president Wendell Steinhauer said the organization was preparing its legal response.

“We intend to take every legal action available to protect the rights of our members,” he said in a statement.

SHBP Changes Enacted Already

The State Health Benefits Commission approved changes to shift retirees into Medicare Advantage plans that would save around $27 million earlier this week.  The School Employees’ Health Benefits Commission hasn’t voted on the changes because of the union members’ absences.