As reported by, in the last three years, hundreds of cities, towns and school districts in New Jersey have saved tens of millions of dollars on health insurance by dumping their private carriers and switching to a little-known benefits program run by the state. But now one of the state’s most powerful lawmakers is promoting legislation that could effectively cripple the program. The lawmaker, Senate President Stephen Sweeney, has placed a provision in a health care insurance bill that would prohibit the program from accepting new members.

Sweeney is a close ally and childhood friend of George Norcross 3rd, perhaps the most influential Democratic boss in New Jersey. Mr. Norcross owns one of the largest brokers of health insurance to government entities in the state, and his company has been losing customers to the program Sweeney wants to rein in. Sweeney acknowledged in an interview that he had spoken with Norcross about the provision, but denies the legislation was introduced at his behest.

Sweeney said the state benefits program was losing hundreds of millions of dollars and required costly state subsidies. A ban on new members would “allow time for stabilization and to judge the plan’s sustainability,” he said. However, state records and interviews call into question Sweeney’s claim that the state program is foundering.

The health coverage bill introduced by Sweeney has gotten attention largely because it would require public sector workers to pay much more for insurance. But, the ban on new admissions to the state program, local officials warn, could administer a poison pill to one of the most effective tools that cities, towns, and school districts in New Jersey can use to pool resources and achieve significant savings in health insurance costs. If the provision is approved, governments not currently in the program would then have to seek insurance through companies like Norcross’ Conner Strong.

The state benefits program covers three groups: one for about 146,000 state workers, another for about 180,000 teachers and other school workers, and a third for about 67,000 local government workers. The program offers relatively generous benefits at low costs, and must accept any municipality or school system in New Jersey that applies, no matter how sick its work force. Privately run insurance pools sometimes accepts only those that have had lower medical expenses. Each municipality or district that joins the state program pays the same rate, so healthier work forces subsidize sicker ones.

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