Gov. Sherrill, 17 state employee unions reach deal to freeze health benefit contribution increases in 2027
TRENTON, N.J. — Gov. Mikie Sherrill and 17 unions representing New Jersey state employees have reached an agreement that will waive increases in employee health benefit contribution rates in 2027 while launching a broader effort to reform the State Health Benefits Program.
The agreement calls for the state to work with participating unions, lawmakers, health care experts and other stakeholders to develop measures aimed at addressing rising health care costs and structural challenges facing the program.
“From Day One, I have been laser focused on making New Jersey more affordable, and that means tackling hard problems. The rising cost of health care is no exception,” said Governor Sherrill. “The severe financial challenges facing the State Health Benefits Program did not emerge in one year or from one decision, and there is no single fix — this is complicated. This agreement brings key stakeholders to the table to take on this challenge together, to address rising costs, while preserving high-quality benefits and putting the program on a more sustainable path for the future. This is about affordability for our public servants, but also for New Jersey taxpayers. Make no mistake; getting this right is key to growing the economic opportunity for all New Jerseyans.”
New Jersey’s public employee health benefit system provides coverage to approximately 690,000 members across state employee, local government and education plans. According to the governor’s office, structural challenges have made it more difficult for the programs to innovate, provide transparency and accountability and respond to increasing costs.
“This Administration is committed to bringing a broad group of stakeholders to the table and working with our partners in the Legislature to develop a responsible path forward for the State Health Benefits Program,” said Chief Operating Officer Kellie Doucette. “This is a problem we must address now. The program’s financial instability affects public employees, employers and taxpayers in communities across New Jersey every day. We must move with urgency, but also thoughtfully and deliberately. Today’s agreement is an important step in that direction, and we look forward to working together on the comprehensive reforms needed to make the program more structurally sound for the future.”
Under the agreement, the state will establish a working group by Oct. 1 that will include representatives of the state and unions, along with other stakeholders selected by the state. The process could also include plan administrators, insurance carriers, health care providers and independent experts.
The group will examine potential changes involving vendor contracting and program operations, claims reviews and eligibility verification, provider networks, plan pricing and employee contribution structures, benefit design, participation rules, governance and data transparency. It will then provide advisory recommendations to the governor.
“For years, our members gave us a clear mandate: fight for structural reforms to fix our healthcare crisis. They’ve shown up in record numbers to dozens of actions, lobby days, and rallies, and their commitment is why we were able to reach this agreement. It protects our state workers from increased health benefit contributions in 2027 and gives labor a real seat at the table on the system’s actual cost drivers. We’ve said it from day one: rising health care costs can’t be solved by asking workers to pay more year after year without addressing long-term systemic change. We appreciate Governor Sherrill’s willingness to work with us, and we’re ready to keep building on this agreement to make healthcare affordable and sustainable for all of our members,” said Dennis Trainor, CWA District 1 Vice President.
“This is a crucial step in bringing about real reform to the State Health Benefits Plan. It prevents our members from having to shoulder additional health care costs, while ensuring that labor has a seat at the table as we work together to make health care more affordable for our members and for the taxpayers. The reality is that you cannot solve the affordability crisis without making health care more affordable, and we appreciate Governor Sherrill’s efforts to address it,” said Steve Tully, Executive Director, AFSCME New Jersey Council 63.
The state and participating unions said the agreement is intended to protect employees from higher health benefit contributions next year while work proceeds on longer-term changes designed to make the program more affordable and sustainable.
