New Jersey, Murphy Scrap $100M State Worker Health Plan Cut

New Jersey Governor Phil Murphy and public labor unions have reached a significant agreement to prevent a planned $100 million cut to the State Health Benefits Program that would have resulted in a steep 21% increase in health insurance premiums for state workers next year. Instead, the agreement limits premium hikes to modest increases and bars any member contribution increases in 2026. Labor leaders hailed the deal as a hard-won victory that protects workers and retirees from catastrophic cost hikes, with reforms included to address the root causes of rising medical expenses. However, health insurance premiums for public employees are still expected to rise sharply in 2026, with state employee premiums projected to increase nearly 20% and local government workers facing hikes up to 36.9%, driven by factors such as rising medical costs and the expiration of enhanced federal subsidies. The compromise includes cost-saving measures such as changes in deductibles, copays, and prescription drug coverage, with the financial burden shared between the state and union members. Governor Murphy emphasized his commitment to working with unions and future state leaders to adopt best practices for controlling healthcare costs and drug pricing.