High Healthcare Costs Hold Back Economic Growth in New Jersey

NJ Spotlight | Watchdogs Target Insurance Brokers Cashing In On Lucrative Government Work.

In the public sector, government, private health insurers, and health insurance brokers form the Bermuda Triangle where the public money vanishes. These high costs are passed onto the private sector and public in the form of taxes.

Of course the almost 2000 government units and subdivisions of the State of New Jersey would save a lot of public money if they went back to the New Jersey Health Benefits Plan (NJHBP), eliminating the middle man. However, most middle men are politically connected and donate to politicians. They have political power. In a few cases, they are not only insurance brokers but political brokers as well.

Once upon a time, almost all government units participated in the NJHBP and the health costs were lower. Under the pretext of introducing competition, more or less like is happening with education now, many government subdivisions hired brokers to look “for the best options”. They often threw the carrot of better coverage to the unions. It was a long process but yielded the high cost health benefits system that we have today.

The biggest name in the insurance brokerage business for local governments is George Norcross, the South Jersey Democratic power broker and often ally of Republican Gov. Chris Christie. Why is it that I am not surprised?

From NJ Spotlight: “Nine months ago, Senate President Stephen Sweeney (D-Gloucester) attempted to insert a provision in pension and healthcare legislation that would have barred the State Health Benefits Plan from accepting any more county or municipal governments or school districts as members. Sweeney pulled the offending clause after the New York Times charged that Sweeney was trying to help Norcross, his political mentor and childhood friend, whose firm was losing business to the low-cost state government competitor.”

My deduction is that Sweeney is a puppet of Norcross. Mr. Norcross has now become very interested in education issues.

To address the State fiscal crisis, motivated in part for those inflated heath care costs, the governor and a complacent legislature declared heath care non-negotiable and imposed on public employees a partial contribution toward premiums. The fairness of such contributions may not be viewed in the same way by everybody but the first step the administration should have taken was to reduce health care costs, not only for public employees but for the private sector as well.

Now the New Jersey Comptroller and the Citizens Campaign Chairman Harry Pozycki point the way to do so. Eliminating the fleecing of the government will not, by itself, solve the issue of high cost of general healthcare but it will be a step in the right direction.

The excuse that many local governments are offering not to switch back to NJHBP is the existing union contracts. But that is a very lame excuse because contract negotiations can be reopened by mutual accord, on a single subject, without having to wait for the expiration of the current labor agreements.

As New Jersey moves along to establish the Healthcare Exchange mandated by the Patient Protection and Affordable Care Act, New Jersey should adopt the most aggressive posture of active purchaser. The Christie administration has remained undecided on the issue and the Norcross connection may be a causal factor in the governor’ s inactivity. The status quo benefits the brokers.

I have long supported a very strong Healthcare Exchange for New Jersey, with a  powerful public option which could be cored with the NJHBP. Furthermore, the State of New Jersey should be an active player in the market, screening out those plans that aim to take advantage of the least insurance-savvy patients. That is the active purchaser role.