Sarlo Welcomes Cost-Saving Moves by State Treasurer

Trenton – Senator Paul Sarlo, the chairman of the Senate Budget and Appropriations Committee, welcomed the moves by the Murphy Administration to identify cost-saving actions that will reduce the expenses of health benefits for public employees.

Senator Sarlo said the administration is following through on initiatives advocated by Senate leaders and the budget committee, including a direct request to the State Treasurer to make use of Third Party Administrators (TPAs), a call to have the Plan Design Committee work to capture the same type of savings for the teachers’ health plan realized by state employees, and follow the repeated recommendation to make use of audits to remove wasteful spending.

The ideas were openly discussed by the Budget Committee and were part of the recent budget negotiations that culminated in the final agreement.

“I welcome the administration’s responsiveness to some of the cost-saving ideas we identified and advocated for,” said Senator Sarlo, who wrote directly to the Treasurer in April urging her to take a serious look at the use of third party administers to drive down premiums for public workers and save money for state and local governments. “The third party administrators can help capture substantial savings but we need to ensure that these savings are shared with those who pay for the care and the benefits, including the taxpayers.”

The TPA’s administer the State Health Benefits Plan and the School Employees Health Benefit Plan by paying claims and negotiating charges with health care providers, but there has been lack of accountability in its findings.

“The Plan Design Committees were instrumental in the past in finding real and lasting savings at the same time health benefits were fully preserved,” said Senator Sarlo. “The reconstituted committees will follow through with the same mandate of eliminating waste. These savings can be captured this year as part of the reforms to the School Employees Health Benefits Plan that were included in the approved budget.”

Senator Sarlo said the work of the Plan Design Committees should generate at least $43 million in savings.

Senator Sarlo also welcomed the use of the “Member Eligibility Audits,” which were incorporated into the budget by the Legislature as the “Medicare Primary Audit” and is accompanied by legislation already approved by both the Senate and Assembly. It will produce an estimated savings of $50 million, said Senator Sarlo.

“These are the types of responsible actions that need to be taken to eliminate wasteful spending and find efficiencies in government,” said Senator Sarlo, who is serving as co-chair of the Legislature’s Economic and Fiscal Policy Working Group, which has been working to identify policies and practices to promote tax fairness and spending efficiencies. “This has to be an ongoing practice that looks to identify both immediate and long-range savings.