Gov. Phil Murphy and 16 public sector unions representing state employees have reached a landmark agreement aimed at delivering $75 million in health care benefit savings. The deal, announced September 4, represents one of the most significant changes to state health plans in nearly 15 years and comes after months of political debate over how to contain costs while ensuring coverage for New Jersey’s workforce.
The issue of state worker health benefits has been a flashpoint throughout the budget process, with lawmakers pressing for reforms to rein in costs that have strained the system. Republicans criticized Democrats for what they saw as years of inaction, while union leaders argued against cuts that could reduce the quality of care. The negotiations prompted rare summer committee hearings and added intensity to an already contentious political season in Trenton.
Murphy said the new agreement strikes a balance between fiscal responsibility and the needs of state workers. “Today we are making responsible and reasonable changes to the state’s health plans – broad changes which have not been made in nearly 15 years,” the governor stated. He emphasized that the deal would create recurring savings during the final months of fiscal year 2026 while laying the groundwork for future reforms.
What’s in the agreement
The agreement, which still requires approval by the State Health Benefits Plan Design Committee later this month, introduces a series of changes designed to reduce costs and encourage in-network care. Among the most notable adjustments:
- A $110 in-network deductible for individuals and $220 for families across plans with lower deductibles.
- A $750 out-of-network deductible for individuals and $1,500 for families.
- An out-of-network out-of-pocket maximum of $2,500 for individuals and $6,000 for families on plans that previously had lower limits.
- New co-pays for prescription drugs, including GLP-1 medications, generics, brand-name, non-preferred brand, and specialty prescriptions.
- Co-pays on lab visits and imaging services across all plans.
- Incentives for using in-network ambulatory surgical centers for certain procedures.
- New limits on out-of-network physical therapy visits.
- An expansion of the Centers of Excellence pilot program, which focuses on providing high-quality, cost-effective care for complex conditions.
The governor’s office has also agreed to support legislation that repeals language in the FY 2026 budget calling for $100 million in recurring health care savings to be identified by the Plan Design Committee. Instead, Murphy and union leaders plan to pursue what they described as “longer-term, significant cost containment strategies,” with the aim of improving medical and drug pricing agreements for the state.
Political reaction
The deal immediately drew praise from Democratic leaders and criticism from Republicans. Assembly Speaker Craig Coughlin, D-19th District, applauded the collaborative approach, saying, “We have always believed that the best way to make public health benefits affordable for taxpayers and public employees is by working collaboratively with workers and their unions. We are pleased that the agreement includes ideas which have been advanced legislatively.”
On the other side of the aisle, Senate Republican Leader Anthony Bucco, R-25th District, and Budget Officer Declan O’Scanlon, R-13th District, expressed concern that the changes will ultimately lead to higher costs. In a joint statement, they argued that the Murphy administration had failed to provide transparency, warning that the deal could result in “increased property taxes and big premium increases for public employees” while leaving deeper structural problems for the next governor to address.
What it means for New Jersey
This agreement highlights the intersection of politics, economics, and worker protections that consistently shape state policy. For state employees, the deal means new deductibles and co-pays, but also the promise of more sustainable benefits in the long term. For taxpayers, it represents a step toward cost containment, though opponents argue the savings may not be enough to offset future premium hikes.
As the Plan Design Committee prepares to review the agreement, the deal stands as one of the Murphy administration’s most significant labor negotiations. It not only addresses immediate budget concerns but also underscores the political dynamics that will influence the state’s economic landscape in the years ahead. For continuing updates on New Jersey politics and government negotiations, visit (https://explorenewjersey.org/politics/).
Union energy filled the streets of Newark as the New Jersey AFL-CIO officially launched its labor walks, a long-standing tradition of political mobilization and grassroots organizing. Led by Charles Wowkanech, president of the New Jersey AFL-CIO, the event brought together union members from across the state, including strong contingents from the Laborers and the Hotel and Gaming Trades Council, who gathered in force outside Newark’s City Hall.
“This week we will begin our labor walks, a full labor program, to drive out the vote,” Wowkanech told the animated crowd, emphasizing the role of organized labor in shaping the political future of New Jersey. The announcement comes at a critical moment in the governor’s race, with unions throwing their support behind Democratic candidate Mikie Sherrill, who has maintained a 100 percent voting record with the AFL-CIO.
The timing of the rally aligned with a sobering new jobs report. The U.S. economy shed jobs for the first time in over four years, with only 22,000 jobs added nationwide and unemployment rising to 4.3 percent. For many union leaders, these figures underscored the urgency of the labor movement’s political efforts. Sherrill addressed the issue directly, stating that tariffs imposed under former President Donald Trump have “wrecked our economy and paralyzed Jersey’s small businesses,” further rallying union workers to her campaign.
Wowkanech echoed those concerns, noting that despite uncertainty in the labor market, Trump’s low polling numbers in New Jersey may provide an opening for Democrats this cycle. “I think there’s a lot of uncertainty and obviously here in New Jersey Trump is polling very low, which is a good thing for us in this cycle,” Wowkanech said. “I’m sure we’re going to take full advantage of that.”
Union solidarity was on full display as longtime labor leaders such as Tom Giblin, Essex County Assemblyman and business manager of the International Union of Operating Engineers Local 68, joined Wowkanech on stage. The crowd roared with approval as speakers reminded workers of the sacrifices made by earlier generations who fought for fair wages, safe working conditions, and benefits that continue to shape modern labor agreements.
“Today’s the day to remember all the people that went before us, who fought to give us the terms and conditions we have today,” Wowkanech said to sustained applause. “It’s now our job that the conditions and terms continue to improve for the next generation of workers.”
The labor walks themselves are expected to be a centerpiece of the AFL-CIO’s campaign strategy, with union members canvassing neighborhoods across New Jersey in the weeks ahead. These door-to-door efforts have long been viewed as one of organized labor’s most effective tools in energizing voter turnout, particularly in tight races where every ballot counts.
For New Jersey’s business community, union-led political activity often has ripple effects, shaping policies that influence wages, benefits, and local economic conditions. With both the workforce and small businesses keeping a close eye on the election, the outcome will have significant implications not only for workers but also for the broader business environment in the Garden State. Updates on labor issues and business news across New Jersey can be found at (https://explorenewjersey.org/category/business/).
The energy in Newark demonstrated that organized labor remains a formidable force in state politics. With unemployment numbers climbing and economic uncertainty weighing heavily on voters, the labor movement’s influence could once again prove decisive in determining who leads New Jersey through its next chapter.
