The City of Paterson is looking at the possibility of ending its longstanding practice of using self-insurance for employee medical coverage and switching to New Jersey’s State Health Benefits program, as reported in By doing so, Paterson believes that it would save approximately 20 million dollars given that its cost for employee medical coverage in 2020 is estimated at 67 million, compared to 44 million under the state plan. Paterson’s current cost for health insurance is 50.5 million for 2018. A report that was presented to the City Council projected the expense for medical coverage would reach $96 million by 2025 if the City were to remain self insured.

The City Council is scheduled to vote on the proposed change next week, and if approved, the switch would be effective on January 1, 2019. This change would affect more than 2,000 employees and retirees.

The switch to the sate benefit health plan had been discussed previously, but never came to fruition as Paterson needed the consent of more than 15 employee labor unions to affect the change. However as reported, labor unions have reached agreements on health care insurance which were adopted in their contracts that will allow the switch to take place.  This fact has not been confirmed by an independent source at this time.

The City has further stated that the city’s savings will result in decreased payroll deductions for city workers. Furthermore, Michael Jackson, president of the union that represents supervisors in the public works department, said the administration has assured employees that coverage under the state health system would be on the same level as what they received under the self-insurance plan. “If it’s going to save what they say it’s going to save, then it’s well worth it,” said Jackson.

We will continue to follow this story as it develops.  It will be particularly interesting to see if the City is able to deliver the same level of benefits and healthcare under the State Plan as it does under its own self insured plan.