By Christin Deacon
I have watched with a mixture of frustration and inevitability as the State Health Benefits Program (SHBP) slid into exactly the kind of fiscal and structural collapse that many of us warned about for years.
I say this as not only a state property tax payer but as a former New Jersey Treasury employee and State Health Benefits Program/School Employees’ Health Benefits Program administrator.
It is the Local Government SHBP plan that bore the greatest harm – trapped in a system they didn’t design, couldn’t reform, and were financially punished for staying in.
That collapse is now being marketed as a “crisis rescue.”
In reality, it’s a bailout. Not of public-sector workers, not of municipalities, and certainly not of taxpayers, but of a system whose failures were engineered, enabled, and ignored by the very administration now claiming to save it.
In 2021, the SHBP-LG still maintained positive reserves — more than enough to meet standard actuarial thresholds for stable claims reserves. By 2025, those reserves are not only gone; the local pool is insolvent. In the red by over $160 million, with loans from the state required just to cover monthly claims.
Over the last four years, premiums have increased more than 60%, driving healthy, lower-cost municipalities out, further destabilized the risk pool, triggering additional rate hikes, and accelerating attrition. Gov. Murphy is calling it a “death spiral.”
Except it isn’t a spiral.
It’s an outcome. The causes weren’t unknown. They were ignored.
During the governor’s tenure, Horizon Blue Cross Blue Shield of New Jersey (Horizon) will have received close to $1 billion in ASO, administrative and other fees (that we know about) for managing the state plan.
And the third-party administrator contract? In 2022, Horizon was rewarded with a rare four-year contract award (not the customary three years) — all while Horizon was actively being investigated by both federal and state agencies for alleged contract fraud related to their administration of this very program.
That investigation has now culminated in a $100 million settlement — including detailed allegations that Horizon systemically and knowingly overpaid claims, overbilled the state, and sent inaccurate explanations of benefits to members.
These are not paperwork errors. They are governance failures.
In a move that was tone-deaf at best and openly dismissive of taxpayers at worst, just one week after the $100 million false claims act settlement with Horizon was announced Murphy appointed one of his longtime campaigners and advisors to Horizon’s Board of Directors.
So, how should we view Murphy’s offer of a one-time $260 million “injection” to shore up the program?
Certainly not as an investment. It is a taxpayer-funded bailout — an attempt to fill a hole that his own administration helped dig through years of neglected oversight, unenforced contract terms, and refusal to confront the very vendors whose incentives are tied to rising costs, not savings.
And rather than fixing those structural failures, the proposal simply shifts the burden onto public workers.
By reducing the actuarial value of plans down to 88% (PPO) or 78% (HDHP), the state isn’t reducing costs — it’s just moving them. The result may be lower premiums on paper, but higher out-of-pocket costs for teachers, DPW workers, police officers, librarians, municipal clerks, and public health nurses.
In other words, the program gets cheaper only because health care gets more expensive for them.
That is not reform — it is redistribution. It is a transfer of liability, away from Treasury and toward the very members who had no ability to prevent the mismanagement that led to insolvency in the first place.
And it leaves untouched the most expensive and least accountable parts of the system: the opaque contracts, the unexamined vendor payments, and the incentive structure that rewards higher spending rather than value.
A true investment would correct those failures. This one simply covers them up.
And a real solution would not ask public workers to pay more for less — it would give them control over their own plan. It would rebuild a system where fiduciary duty, transparency, and accountable governance matter more than political appointments or vendor protection.
Because at its core, this is not a funding crisis — it is a governance crisis.
Calling your elected representative in the state Assembly or Senate is the most effective way to influence policy. To find your state Assembly member and Senator to voice your position, go to the New Jersey Legislature website’s Legislative Roster.
Christin Deacon is the former assistant director at the state Division of Pensions and Benefits, SHBP/SEHBP.