For the last several months, a lot of attention has been focused on one number: 34%.
That is the health-insurance rate increase that school districts participating in the School Employees’ Health Benefits Program (SEHBP) will face on Jan. 1, 2027.
Over the course of four meetings spanning two months, New Jersey Education Association representatives on the commission that oversees the program opposed that increase. They didn’t think voting no would make the underlying costs go down. They voted no because it would have been irresponsible to ask school districts, school employees and taxpayers to absorb costs of that magnitude without first exhausting every possible opportunity to find savings.
Those rates have now been approved. We can argue about how we got here, but that will not lower costs in January, protect students from being hurt or stop us from being right back in the same place a year from now.
‘Death spiral’ looms
So, now what?
That is the question everyone who cares about New Jersey’s public schools should be asking. And we need to answer it quickly.
The SEHBP is no longer sustainable in its current form.
Healthcare costs are rising dramatically, participation by school districts in the SEHBP is shrinking and enormous annual increases are putting even more pressure on those that remain. As districts leave the SEHBP for other options, the program loses the scale and stability that are supposed to make a statewide plan work. That gives more districts an incentive to leave and drives costs even higher for those that stay.
That’s a health-insurance death spiral.
Without action, that deterioration will continue. The system many school districts rely on to provide employee health insurance could ultimately collapse.
Waiting for that to happen would be irresponsible and we refuse to simply wait for that to happen.
Who pays the price?
The consequences extend far beyond health insurance. When a school district suddenly has to spend millions more on health benefits, that money comes from the same budget that pays the salaries of teachers and educational support professionals, academic programs, transportation, extracurricular activities, student services and everything else our students need to be successful.
Students should not pay the price because healthcare costs are out of control, but unless we fix this problem, they will suffer too.
And neither should school employees. Asking educators to pay more for their health coverage does not make an exorbitant hospital bill less expensive. Raising copays does not lower the price of prescription drugs. Increasing deductibles does not control costs. Shifting costs from one pocket to another may change who gets the bill, but the bill remains too high.
We need to reduce the bill.
That means confronting the parts of our healthcare system where rising costs and profits are putting an unsustainable burden on working families and public employers. It means asking hard but necessary questions about how we purchase healthcare, how prices are established, how contracts are managed and whether employees, employers and taxpayers are getting the best value for the money they invest in healthcare every year.
It also means demanding much greater transparency. School employees, school districts and taxpayers deserve to know where that money is going, what is driving costs up and whether every opportunity to get better value is being pursued. You cannot fix what you cannot even see. One solution is obvious: We have to use our size to our advantage.
Strength in numbers
No individual school district has much leverage in a healthcare marketplace dominated by enormous insurance companies, hospital systems, pharmaceutical companies and other powerful interests with deep pockets. But together, New Jersey’s public schools have market-moving purchasing power. We should use that power strategically to demand lower prices, better service and greater accountability from everyone in the healthcare system.
That is why NJEA supports S-4438/A-5285, the Public School Employees’ Health Benefits Trust Act.
That legislation would create a new structure for school employee health benefits. The people who pay for and rely on the system would have responsibility for managing it. It would allow school districts to achieve economies of scale and use their combined purchasing power to bend the cost curve. It would provide real transparency and accountability while preserving access to high-quality, affordable healthcare for New Jersey public school employees.
Instead of hundreds of school districts confronting the healthcare market largely on their own, we can bring them together and bargain from shared strength. Instead of reacting after costs have already gone up, we can create a system that proactively looks for savings, demands value and makes our healthcare dollars work harder for New Jersey’s schools and families.
Call for collaboration
We know that lasting reform will require more than the NJEA. We are ready to partner in that work with the Legislature and the administration of Gov. Mikie Sherrill, with school boards and school administrators, with labor and management, with Democrats and Republicans and with other experts and stakeholders throughout our healthcare system who have both expertise and a commitment to cost savings.
We have good ideas, but we don’t claim to have every answer. We should put all ideas on the table and judge them by whether they make healthcare more affordable and sustainable without simply shifting costs onto someone else. We are asking everyone who has a stake in this issue to come to the table. If there are ways to strengthen this proposal and produce greater savings, let’s talk about them. The important thing is that we do it together and we do it now.
The fight over the 2027 rates showed that the current path leads to a cliff. No one wins by pushing anyone over the edge. Arguing over who should be forced to absorb costs that everyone agrees are too high solves nothing.
Let’s focus instead on lowering those costs and building a system strong enough to serve New Jersey’s public schools for the long term.
We have a window right now to create something better before the next even worse crisis arrives. Let’s use it together. Our students, schools, educators and communities deserve nothing less.
