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Our view: Public workers’ lavish benefits to cost taxpayers more

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Murphy shifts union members' cost increase to taxpayers

As government employee unions expected, Gov. Phil Murphy cut a deal with them to shift nearly all the increased cost of their health insurance to state taxpayers.

The convictions and guilty pleas have resumed in the conspiracy by public employees and corrupt doctors and benefits administrators to steal millions from the lavish health benefits New Jersey officials give to their union allies.

Their submission of bogus prescriptions for dubious expensive compounded medicines defrauded the state and its taxpayers of more than $50 million. The health insurance of the state workers paid $19,000 a month for a prescription, according to testimony. The New Jersey conspirators and their Louisiana pharmacy partner divided the money among themselves. Many have gotten hundreds of thousands of dollars each, and some millions.

Fraud is a vast problem for state and federal government benefits programs. Oversight of such programs is so poor that no agency even estimates just how many hundreds of billions of dollars are lost to fraud each year.

This fraud comes out of the public’s pocket and contributes to benefit costs that are soaring out of control.

Recently New Jersey officials discovered that public workers increased their use of their health insurance by 20% to 30% last year, far above the expected 10% as the pandemic faded. Inflation of course was blamed, even though that has jumped this year, not last.

The state’s actuary that analyzes the health plan, Aon Hewitt, said premiums to cover active state workers should cost 20% more, for municipal and school workers 21.6% more, and for early state retirees 13% more.

The Murphy administration and other officials have boasted of efforts to reduce the cost of the state’s benefits to its workers, but the actuaries told benefit planners that the savings haven’t panned out, according to New Jersey Monitor. A Horizon Blue Cross Blue Shield care navigation program, for example, was forecast to cut costs by up to 3.5% but failed to deliver.

Joyce Malerba, acting assistant director of health benefits operations at the state Treasury, said public workers can choose any care they wish without regard to cost. “They can go anywhere they want” instead of going to their primary care physician, Malerba said.

The recent federal fraud conviction of Margate firefighter Thomas Sher showed workers claiming costly and questionable benefits simply on the recommendation of others who wanted a share of kickbacks too. Sher testified he didn’t think there was anything wrong in receiving large payouts from the prescription scheme. “I did not know this was health care fraud,” Sher testified.

That raises the question: Is scamming government benefits so common that some no longer consider it serious or even a crime?

A more telling look at the character of public union benefits came from the testimony at Sher’s trial by someone not accused of a crime.

Margate Fire Chief Daniel Adams said Sher encouraged him to apply for compounded prescriptions. It was covered by his wife’s state insurance plan from her job with the Linwood School District.

Adams said the prescriptions did not work, so they stopped taking them after a few weeks and later disposed of them. But they kept coming each month, unwanted and at great cost to the public and benefit to the criminal conspirators. If Adams and his wife had stopped the prescription instead of disposing of it after delivery, the fraud would have been a little smaller.

Republican lawmakers want a select committee to investigate the increases in use and costs of health benefits, and adoption of the reforms urged by the New Jersey Pension and Health Benefit Study Commission. “The state spends nearly triple what a private employer contributes for health benefits. Neither taxpayers nor public sector workers can sustain this,” said Assemblyman Christopher DePhillips, R-Bergen.

Democrats proposed adding local government representatives to the board that sets the premium rates for health insurance.

Public workers pay just a small share of their coverage costs. Last week, as government employee unions expected, Gov. Phil Murphy cut a deal with them to shift nearly all the increased cost of the health insurance to state taxpayers.

State employees, among Murphy’s strongest political backers, will pay no more than 3% of the large increase in the cost of their health benefits.

Murphy and the state aren’t picking up the tab for union employees of municipalities, however. Local governments and their property taxes, which pay as much as 70% of the premiums for employee health benefits, will face a bill nearly 23% higher for the opulent benefits.

This is generally the norm for government officials and public worker unions in New Jersey. They give themselves outsized pay and benefits, control who gets the jobs, protect themselves from competition and disciplinary action, and bill it all to other people. It’s government by and for the people -- in government.

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