New Jersey Gov. Mikie Sherrill has announced the launch of a multi-stakeholder working group to pursue structural reform of the state's public employee health benefits program, according to RNJ News, after a documented financial breakdown forced the issue.
Since 2022, premiums for the state employee group have risen more than 60 percent and premiums for the local government group more than 100 percent, according to a 2026 resolution of the New Jersey State Health Benefits Plan Design Committee. More than 20 percent of local government participants have left the program, accelerating an adverse selection spiral the state's own Treasury called structurally unstable.
"For too long, New Jersey has responded one rate cycle at a time," Sherrill told RNJ News. "We are taking a different approach by bringing stakeholders together, working from shared data, and pursuing long-term changes."
The reform working group's scope covers plan design, provider networks, premium contribution structure, program governance, and administration. Participants include the program's current carriers, Aetna and Horizon Blue Cross Blue Shield of New Jersey, alongside 17 labor unions, public employer associations, health care organizations, and legislators from both parties. The group holds its first meeting October 16, with detailed implementation planning expected through 2027.
The problems driving New Jersey's review are not specific to public-sector plans. Aon projects employer health costs will rise 9.5 percent in 2027 to more than $19,000 per employee, while Marsh puts the increase at 8.2 percent, the steepest since 2003. More than a third of the 3,717 US employers Gallagher surveyed for its 2026 Workforce Trends Report saw premiums rise 10 percent or more at their last renewal, even after making plan design changes.
The distinction between what New Jersey is doing and what most private employers do is not the cost pressure, it is the response to it. New Jersey convened carriers, unions, employers, clinicians, and legislators in a single process, with shared data and a defined mandate covering governance, network adequacy, plan design, and premium structure simultaneously. Most private employers make benefits decisions in a narrow annual window without that kind of structured review.
Most mid-market employers have never formally evaluated their health plan funding structure, according to Jennifer Schaefer, founder and CEO of JS Benefits Group. That leaves the broker as the only party positioned to initiate that conversation before a renewal number forces it.
The New Jersey program's governance problem is instructive. Its plan design committee was split evenly between management and labor. That structure produced what the state's Treasury described as an entrenched status quo of expensive benefits with limited accountability for long-term cost outcomes. The working group is an attempt to break that through a broader process with an explicit reform mandate.
Private employer plan governance rarely receives this kind of scrutiny. Benefits decisions get made at renewal by whoever is in the room, without a framework for evaluating plan performance against cost and workforce outcomes between cycles. Gallagher's 2026 Workforce Trends Report also found that employers investing in ongoing governance and analytics are creating the conditions where a broker's knowledge of vendor markets, claims data, and funding strategy produces its most differentiated value across the plan year rather than only at renewal.
