We at Grinspec Consulting are heavily involved in the New Jersey
public employer marketplace. This involvement goes far beyond the
normal broker or consultant relationship that you may have
experienced in the past. The following are examples of such
activities:
Grinspec Hospital Discounts in Conjunction with Health
Coverage - Many insurance companies have contracted with
approximately two-thirds of the hospitals in the State of New Jersey
to participate in their PPO programs. Grinspec has been in contact
with many of the remaining hospitals in an effort to negotiate
discounts on behalf of our clients. Certain hospitals that fall into
this situation are Raritan Bay (Perth Amboy and Old Bridge
Hospitals) and Union Hospital, and previously Jersey Shore Medical
and St. Barnabas Medical. These discounts and resulting savings, are
available to both the employer and the employees. The discounts can
represent a significant reduction in claim liability, and thus
result in lower rates than would otherwise apply.
Minimum Premium Litigation - The NJEA filed a
grievance against the Middletown Board of Education in regard to the
Minimum Premium concept. Grinspec felt the ruling from the State
Department of Education Administrative Law Judge was based upon
incorrect assumptions. Through our efforts an amendment was attached
to the Self-Insurance Bill (A-2168) that would specifically
authorize the use of the Minimum Premium Concept for Public
Employers in New Jersey. This bill was signed into law by Governor
Whitman on April 10, 1995.
N.J. Division of Taxation Ruling (Cafeteria Plans)
- When the Director of Taxation in New Jersey ruled that "The power
to refuse cash and direct its expenditure is the equivalent of
actual receipt and possession" which directly affects public
employers that remunerate employees who drop spouse coverage,
Grinspec initiated the following action:
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Requested Assemblyman Augustine to write to the
Attorney General to overrule this decision.
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Since unsuccessful at the Attorney General's level,
we initiated action to resurrect the Murphy/Batemen Bill (A-1489)
to correct this inequity. This Bill passed both houses of the
legislature and was signed into law by Governor Whitman on June 1,
1995.
Cost Containment - Grinspec was directly involved
with the Edison Board of Education in 1990 in negotiating
single-only coverage for new employees, during their first three
years of employment. Under this arrangement, dependent coverage is
contributory on the part of the employee. This arrangement has
become known throughout New Jersey as the "Edison Plan" because
Edison was the first school district to negotiate this type of
coverage. Since 1990, many school districts have implemented the
"Edison Plan" resulting in significant premium savings.
Passive PPO - During 1992 the DRG system of
hospital charges was abandoned by the State of New Jersey. With the
elimination of this control system, many large insurance companies
all independently negotiated sizable hospital discounts and
physician discounts for their managed care (PPO) programs. They were
negotiating nothing in the way of discounts for their traditional
indemnity plans. This prompted Grinspec to negotiate changing the
description of all of our medical indemnity plans so that they would
be referred to as a passive PPO program. It took most of 1993 to
complete these negotiations. It required a very special feature in
that anyone using a non-participant physician or hospital would
still have the same full benefit, so as to comply with negotiated
contracts between employers and various bargaining groups. This is
an extremely unusual feature of a passive PPO program for all the
insurance companies across the country. When we were finally able to
conclude our negotiations to change the medical contracts for our
public employer clients, it was implemented around the beginning of
1994. Shortly thereafter, this plan design was implemented by most
carriers in the marketplace.
N.J. Department of Education Ruling on Termination
Reserves -The Department of Education, on August 11,1995,
ruled that Incurred But Not Reported reserves under minimum premium
plans were not a true liability, and thus must be considered
surplus. Grinspec strongly objected to this ruling. The New Jersey
Society of Certified Public Accountants (NJSCPA) convened a special
meeting at our request to review this issue. At the meeting we
presented a "white paper" clarifying the issues. As a result of our
meeting, the NJSCPA government accounting committee pursued our
concern with the DOE. The DOE reversed itself on August 30,1995, and
termination reserves are now considered a true liability.
A-4 Surcharge - Grinspec has aggressively fought
the Surcharge since its inception as part of the Quality Education
Act of 1993. This includes the following chronology of
events:
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Developed a "White Paper" on the Surcharge and
"Legislative Alerts" in December of 1992 - prior to the passage of
the QEA Act. Sent letters to affected boards asking them to oppose
it.
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Testified in collaboration with insurance companies
before Senate Committees - prior to the passage of the Act.
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Employed a Lobbyist in the Spring of 1998 to
coordinate efforts to obtain legislation to amend or repeal the
Surcharge.
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On April 20, 1998 and June 8, 1998 sent
"Legislative Alerts" to all school districts affected by the
Surcharge.
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In October, 1998 obtained Legislative Bills from
Assemblyman Christopher "Kip" Bateman and Senator Martha Bark to
cap the Surcharge at 2%.
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At the October 28-30, 1998 NJSBA workshop, received
350 signatures opposing the Surcharge. This petition was submitted
to Assemblyman Augustine's Committee on February 11, 1999.
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On February 11, 1999 testified before Assemblyman
Augustine's State Government Committee.
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On February 25, 1999 met and presented a position
paper opposing the Surcharge to the State Pension and Health
Benefits Review Commission.
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On April 8, 1999 met with management and attorneys
for the insurance companies affected by the Surcharge.
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In September, 1999 were notified that the State
Treasurer had reduced the Surcharge over the next three fiscal
years:
Fiscal year 2000 - 3.6%
Fiscal year 2001 -
2.2%
Fiscal year 2002 - 2.2%
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On September 14, 1999 faxed a memo to all districts
notifying them of the A-4 Surcharge reductions.
While we applaud the Treasurer's actions, Grinspec will still
pursue the repeal of the A-4 Surcharge. The financial condition of
the pension fund, especially the surplus in the Retiree Health
Benefits account obviates any reason to keep the Surcharge.
In summary, we believe the above represents the ongoing efforts
of Grinspec in saving our clients money in the second largest line
item of their budget. All of these efforts are beyond the normal
scope of a consultant or a broker and we are proud to say that it
represents the spirit of Grinspec in servicing our
clients. |
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2008 • Grinspec Consulting