Report warns of likely double-digit health premium increases for school employees in 2027
TRENTON, N.J. — A new report from the New Jersey Department of the Treasury indicates that health insurance premiums for school employees could see double-digit increases in 2027 due to rising costs and ongoing financial challenges within the state’s School Employees Health Benefits Plan.
The report, prepared by plan actuary Aon and presented at a recent SEHBP Commission meeting, highlights mounting pressures on the system, including the departure of healthier members, increasing medical and prescription drug costs, and declining revenue.
While the report does not set final rates, officials said it signals a strong likelihood of significant premium increases when recommendations are issued in July.
According to the report, local school districts with healthier employee populations have continued leaving the SEHBP for lower-cost private plans, leaving behind a higher concentration of members with greater health care needs. This shift has reduced premium revenue while increasing overall costs.
The actuary reported losses of $126 million in 2024 and $207 million in 2025, totaling $333 million over two years. Officials said these losses could lead to higher premium increases and potentially a midyear rate adjustment for some districts.
The report also cited rising health care utilization and costs as major drivers. Medical claims for active employees increased by 12%, while prescription drug claims rose 24%. Among early retirees, medical claims increased 11.5% and prescription drug claims rose 22%.
Prescription drug spending, particularly for specialty medications and GLP-1 weight loss drugs, was identified as a key factor. Spending on GLP-1 drugs increased nearly 95% for active members and more than 126% for early retirees on a per-member basis over one year.
The report also noted that although newer, lower-cost plans introduced in 2020 have attracted members, the resulting drop in premium revenue has offset some of the anticipated savings.
Treasury officials said the findings reflect ongoing structural challenges facing the SEHBP and warned that without changes, the plan could face further financial strain.
