Feb. 25 (Bloomberg) -- One of Governor Chris Christie’s “tough choices” for balancing New Jersey’s $29.4 billion budget is making public workers cover 30 percent of health-care premiums, about what their private-sector counterparts pay.
Governments across the nation may follow the 48-year-old Republican’s example to boost civil servants’ share of medical costs to almost double the average for U.S. state and local employees.
“There’s a broad-scale movement now, even among Democratic governors, to get workers to pay more for their health care,” said Jeffrey Keefe, professor of labor and employment relations at Rutgers University in New Brunswick.
Christie started the battle over public-employee benefits while running for governor in 2009 when he blamed the rising cost of health coverage for contributing to state deficits, and “he was so successful with that campaign that it became imitated by Republicans nationally,” Keefe said in a telephone interview.
Reducing the expense of the public workforce has become a focus of politicians as governments at every level try to brush off the lingering effects of the most prolonged U.S. recession since World War II. Forty-four states may face deficits of as much as $125 billion in the next fiscal year, according to the Washington-based Center on Budget and Policy Priorities.
New Jersey spends $4.3 billion annually on health insurance for current and retired workers, a cost Christie said will rise 40 percent in four years without his plan. Since he proposed raising employers’ contributions in September, other governors have followed.
Wisconsin Governor Scott Walker said this month state workers should pay at least 12 percent of their health-care premiums, up from 6 percent now. Ohio’s John Kasich supports a Republican bill that would require state workers to pay at least 20 percent of plan premiums. They pay 15 percent or less now.
Such proposals have sparked union demonstrations in Wisconsin, Ohio and Indiana. Similar rallies were planned for 27 states this week, including today at New Jersey’s capitol.
New Jersey pays 92 percent of the cost of employees’ health premiums now, more than Delaware’s 91 percent and New York’s 83 percent, while the U.S. government covers 66 percent, according to data from Christie’s office. He wants to lower his state’s cost to 70 percent, a move he says would save $323 million that would be used to help residents who pay the nation’s highest property taxes.
U.S. local and state government employees enrolled in family health-insurance plans paid on average 17 percent of premiums in 2009, according to the Agency for Healthcare Research and Quality, part of the U.S. Department of Health and Human Services. Private-sector workers paid on average 30 percent, according to data compiled by the department.
“I just want everybody to pay their fair share,” Christie said at a Feb. 24 town-hall meeting in West Deptford. “We are not asking for anything unfair.”
Christie’s quarrels with public unions have so far helped the governor, said Ben Dworkin, director of the Rebovich Institute of New Jersey Politics at Rider University in Lawrenceville.
“The governor has made it clear that public employees are different from everyone else,” Dworkin said. “Like any prosecutor, he’s assigning blame.”
Christie, a former U.S. attorney and the first Republican elected governor of New Jersey since 1997, won in a state where Democrats outnumber Republicans and the unions backed his opponent, incumbent Jon Corzine.
In November, Republicans across the nation capitalized on discontent with the economy and joblessness holding above 9 percent to win a majority of governorships. Most of the Republicans followed Christie in saying they won’t raise taxes.
Governors have focused on employee costs as one-time revenue fixes that were previously used became unavailable, said Matt Fabian, managing director at Concord, Massachusetts-based Municipal Market Advisors.
Fabian said the “anti-tax, anti-government” sentiments many politicians are espousing may have ripple effects in the $2.9 trillion municipal-bond market.
“The protests and the pushback have shown that maybe there’s some limits to the extent to which spending cuts alone can balance budgets,” Fabian said in an interview. “If you say tax increases are impossible for any reason -- even to the point of disrupting your own government -- bondholders should have some concern about the long-term willingness to pay your debt.”
Christie has highlighted the disparity between the “gold-plated” benefits for New Jersey workers and those he got as a federal employee.
The governor, an asthmatic who uses an inhaler daily, said that under his federal health plan, he spent $55 every two months replacing the device. As a state employee, he pays $15.
“The cost of that inhaler didn’t go down,” he said during a Jan. 25 interview. “I’m saving $240 a year out of my own pocket and it’s being pushed onto the taxpayer.”
Senate President Stephen Sweeney, a Democrat whose party controls both houses of New Jersey’s Legislature, has introduced a competing health-care plan that would raise workers’ contributions gradually over seven years and let lower-income employees contribute a smaller percentage. Christie’s strategy of linking property-tax relief to passage of his proposals amounts to “political theatrics,” Sweeney said in a Feb. 24 phone interview.
“Ultimatums don’t go anywhere with anyone,” said Sweeney. “He’s talking about a large part of their income. What we need to do is be fair, and Christie’s plan doesn’t acknowledge any difference between low and high incomes.”
The New Jersey Education Association, which represents about 200,000 current and retired educators, estimates Christie’s health-benefits proposal and his call for higher pension payments would cost teachers earning an average $66,000 at least 15 percent of their compensation.
Politicians such as Christie are using the economic downturn to pit public-sector workers against taxpayers, said Steve Baker, a spokesman for the union. Changes to benefits and pensions should take place at the bargaining table, he said.
Diane Camiolo, who taught at Kingsway Regional High School for 36 years, collects a $42,000 annual pension after retiring at a final salary of $72,000. During her time in the classroom, she said her union once agreed to lower a planned 5 percent raise to 3.5 percent to retain health insurance and accepted a longer school year.
While contribution levels won’t rise for current retirees, other proposals such as an increase in the number of plan options and higher co-pays for doctor visits would apply. The changes are unfair to those who have worked under the assumption of receiving paid health insurance after they retire, Camiolo said at Christie’s West Deptford meeting.
“This is sort of like changing the rules of a football game halfway through,” said Camiolo, 61, who lives in Glassboro and is president of the Gloucester County Retired Educators Association. “You can’t do it.”
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