This past week, the New Jersey Department of Treasury released Aon’s mid-year financial report for the School Employees Health Benefit Program (SEHBP). The report shows the SEHBP continues its troubling financial situation despite implementing large rate increases which took place January 1, 2026. It also suggests that after the large increase for 2026, the claim stabilization reserve (CSR) funding was expected to have improved to $121 million. However, the updated analysis suggests the SEHBP will now be at a $30 million negative CSR by the end of this year.
The report documents three significant factors for the SEHBP’s continued financial deterioration:
- Trends continue to run higher than expected with the most recent 12-month period reflecting 12% and 24% increases in medical and prescription, respectively.
- Enrollment decline in the SEHBP, as groups continue to leave the state and enter into direct contracts with private carriers in favor of more affordable coverage.
- Continued mandated migration of new members into the Educator’s Health Plan (Chapter 44) at undervalued rates that don’t support the plan benefits or claim experience.
The main drivers of cost for the SEHBP prescription plan comes from GLP-1 and anti-inflammatory drugs. GLP-1 drugs account for four of the top five drugs in terms of drug spend, while anti-inflammatory drugs make up four of the top 10 drugs based on drug spend.
Although the report does not implicitly forecast exact rate actions for January 1, 2027, it does imply by the negative CSR forecast, continued double-digit trends and loss of membership that could signal a need for another significant high increase and/or major changes to existing plan designs.
Benecard remains actively engaged in monitoring this situation and will continue to keep you informed of any updates related to the NJ SEHBP. If you have questions or would like to discuss, please reach out to us at talktous@benecard.com.
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