Corzine Fails To Address Staggering Costs For Public Employee Health Care

In his Budget Address in February, Gov. Jon Corzine said:

Healthcare costs for state workers and retirees are projected to double—from $1.4 billion to $2.8 billion in five years. Post-retirement medical costs for teachers are expected to more than double—from $750 million this year to $1.8 billion in just five years.

In his April testimony before the state Senate Budget and Appropriations Committee, New Jersey State Treasurer Bradley Abelow said:

In addition to the unfunded pension liability, our actuary’s preliminary estimate of the State’s future liability for postretirement medical benefits for current and future retirees is a staggering $78 billion.

These staggering costs for public employee health care and other benefits needed to be addressed in this year’s contract negotiations with state worker and teachers’ unions. Instead, Corzine agreed to a sweetheart deal that had unions bragging about the best deal they’ve negotiated in 15 years.

The new four-year union contact had one element to address retiree health care costs - future retirees were to have contributed 1.5 percent of their pensions toward the cost of their health benefits. Now, even that small concession has been abandoned.

Just three months after signing off on a landmark state worker contract that traded generous pay hikes for increased employee payments toward health benefits, Gov. Jon Corzine's administration is backing away from one key feature of the new pact.

[T]he Corzine administration has agreed to scrap a requirement that future retirees contribute 1.5 percent of their pensions toward the cost of their health benefits.

Under the amended agreement retired workers will be able to continue getting free health insurance if they sign up for a "wellness program". Paid for by taxpayers, of course.

"The change is de minimis relative to the overall scale of what has occurred," Corzine said.

Compared to a $78 billion obligation nearly any amount is “de minimis”, including the total of New Jersey state assets, valued at $35.4 billion, according a recent report by Credit Suisse.

Corzine’s excuse for caving into union demands after the contract had been ratified by union members only serves to highlight the incompetence of his administration. The new and improved healthcare plan won’t be ready until April 1 rather than January 1 as required by the deal.

Corzine said the process of soliciting and evaluating bids for insurers to offer the new health plans took longer than expected.

Corzine may be slow with getting the job done, but he really knows how to drive a hard bargain. The negotiated price for the three month delay is totally free retiree health insurance and a wellness program. Keep this in mind when Corzine sells the Turnpike and Parkway as a down payment on the state’s obligation to public employees. Taxes will have to be raised 24 percent to pay for the rest.

In the meantime, New Jersey’s public employee payrolls continue to swell with more workers being added to the burden. In the past year, the state has added 1,000 workers and local governments have added 5,000.

The question remains, will this sorry situation have any impact on this fall’s elections?