AON, the state’s actuary, has reviewed the proposals submitted by the state representatives and labor representatives of the Plan Design Committee. AON has completed the actuarial analysis and scoring of the State’s proposed cost saving measures and the actuarial analysis and scoring of the Labor’s proposed cost saving measures. The Plan Design Committee is scheduled to meet on August 27 and may vote upon the proposals that AON has verified as cost savings. Please note that the recommendations are for the State systems and not the local system. But any changes made to the State system will likely be considered for the local system.  

Of the proposals submitted, AON projected savings for the following: 

• Elimination of all current plans and replacement with a modified Unity PPO and a modified Tiered Network plan. The proposal submitted by the State includes four different scenarios. Depending on the scenario chosen, AON projects annual savings for State active employees ranging from $110 million to $256 million and $25 million to $48 million for early retirees.  
• Retain all current SHBP plans and increase the deductibles and out-of-pocket maximum amounts across all plans for both in-network and out-of-network care. AON projects an annual savings for this state proposal to State active employees of $182 million and $31 million for early retirees.  
• Implement spousal surcharge of $50 per month for members with a spouse who has access to other health benefit coverage through their own employer but uses the SHBP plan. AON projects an annual savings for this State proposal to State active employees of $24 million, including an estimated $13 million in cost savings due to dropped spouse coverage and $11 million in estimated surcharges paid and $2 million for early retirees, including an estimated $1 million in cost savings due to dropped spouse coverage and $1 million in estimated surcharges paid. 
• Limit physical therapy and chiropractic visits for all plans to 30 per year. AON projects an annual savings for this State proposal to State active employees of $5 million and $1 million for early retirees.  
• Modify prescription drug co-pays across all plans in tandem with increased member cost share with GLP-1 drugs, requiring all members and dependents prescribed a GLP-1 drug to participate in behavior modification/lifestyle management co-therapy. AON projects annual savings for this state proposal to state active employees of $43 million and $4 million for early retirees.  
• Across all populations limit access to GLP-1 drugs for weight loss to members with a BMI at or greater than 35 in tandem with increased member cost share with GLP-1 drugs, requiring all members and dependents prescribed a GLP-1 drug to participate in behavior modification/lifestyle management co-therapy. AON projects annual savings for this State proposal to State active employees of $48 million. Early retiree savings impact is unavailable within the requested time period.  
• Implement three-tiered copay for GLP-1 for anti-obesity, effective January 1, 2026, with $35 per month for brand preferred and $50 per month for brand non-preferred. AON projects annual savings for this labor proposal to state active employees $4 million for brand preferred and $20 million for brand non-preferred. However, AON noted that Wegovy and Zepbound are currently co-preferred and both agents must be at the same cost-share level.  

We have prepared a summary of the proposals submitted along with the AON scoring.  

AON stated that it was unable to score many of the proposals submitted by the Labor representatives, citing the following: the need for required data from existing vendor partners with a separate audit/data evaluation; unable to verify impact of change within the requested time period and lacked data; unable to complete evaluation based on existing contractual terms; or it could not independently produce verifiable savings.  

We would also note that in evaluating Labor’s proposal for implementing Reference Based Pricing (RFB) across all SHBP plans at 200% of CMS in and out of network and prohibit balance billing, AON found that: 

It could not “…produce a verifiable savings figure for this proposal. The concept of Reference Based Pricing, if administered properly, can produce significant savings. However, AON does not have sufficient information to provide verifiable savings for a proposed RBP solution. Provider acceptance is uncertain, and balance billing cannot be prohibited without contracts or legislation. These factors introduce significant unpredictability in both costs and member experience, making any savings projection speculative rather than verifiable.  

The proposed solution cannot be verified, as it is written today, due to a variety of factors. A major concern with the proposed approach, based on AON’s interpretation, is the lack of provider contracting and acceptance data: 

• RBP relies on paying providers a set percentage above CMS (Medicare) rates, rather than negotiated rates. Many providers are not contractually obligated to accept these payments, especially at the specified 200% of CMS within the existing network offered through the SHBP. 

• Without provider contracts or historical acceptance data, it is impossible to predict how many claims will be paid at 200% of CMS, or whether providers will refuse payment and seek higher amounts. 

• Without clarity on enforceability, the plan’s actual payment outcomes and savings cannot be verified.” 

Labor representatives also suggested that the plan actuary should analyze and recommend rates for medical carriers based on each respective carrier’s (Horizon and Aetna) claims and trend data and revise premium rate recommendation for each plan. AON advised against separate ratings because of insufficient credibility, specifically “limited enrollment and historical claims experience for Aetna. Currently, only six months of Aetna incurred claims data (plus three months of runout) are available, and only 4% of participants are enrolled with Aetna. This limited data does not provide a reliable basis for separate rate setting.” 

We will provide an update after the August 27 Plan Design Committee meeting. 

Contacts: Lori Buckelew, Deputy Executive Director, lbuckelew@njlm.org, 609-695-3481, x112, or Erin Knoedler, Legislative Analyst, eknoedler@njlm.org, 609-695-3481, x116.