New Jersey: Government run health plan looking to close their doors

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New Jersey Health Insurance SystemIn New Jersey, hundreds of cities and school districts have saved a fortune by taking part in the state’s relatively unknown benefits program. For the past three years, an increasing number of people are dropping the insurance policies they bought from big name companies in favor of the state’s program. Some legislators are looking to change that by proposing a new bill that could severely inhibit the program.

Stephen M. Sweeney, the State Senate president, is proposing legislation that would prohibit the state run insurance program from accepting new members. Sweeney claims that the program is costing the state hundreds of millions of dollars. He notes that suspending acceptance would “allow time for stabilization” and give lawmakers an opportunity to determine whether the program can continue or not.

The proposal has come under fire from opposing members of the State Senate. Some are accusing Sweeney of showing favoritism to an industry to which he is closely related. Sweeney has a long, personal relationship with George E. Norcross, the owner of the largest health insurance brokerage in the state. Norcross’ company has reported a hemorrhage of customers since the state benefits program began.

Supporters of the program hold that it has given options to those that have had limited options in a troubled economy. The majority of the program’s participants are school districts, many of which have fewer than 450 workers on staff. Many districts have had to cut their health insurance benefits in light of the recession, but by switching to the state’s program, some have been saving as much as $7 million in insurance costs.

The bill has a long road of debate ahead before it can reaches the Senate floor.

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