NJ Spotlight: Watchdogs Target Insurance Brokers' Lucrative Government Work

To State Comptroller Matthew Boxer and Citizens Campaign Chairman Harry Pozycki, it's a simple question: Why are New Jersey's county and municipal governments and school districts spending tens of millions of property tax dollars unnecessarily on high-priced insurance plans and broker fees?

NJ Spotlight's Mark J. Magyar reports on this politically sensitive question: The biggest name in the insurance brokerage business for local governments is George Norcross, the South Jersey Democratic power broker and often ally of Republican Gov. Chris Christie.

Norcross's firm, Conner Strong & Buckelew, is by all accounts the biggest player in New Jersey's local government insurance market, and could have the most to lose if Boxer's and Pozycki's recommendations start a stampede toward the low-cost State Health Benefits Plan by municipalities, counties, and school districts forced to look harder for cost savings because of the new 2 percent spending cap.

Nine months ago, Senate President Stephen Sweeney (D-Gloucester) attempted to insert a provision in pension and healthcare legislation that would have barred the State Health Benefits Plan from accepting any more county or municipal governments or school districts as members. Sweeney pulled the offending clause after the New York Times charged that Sweeney was trying to help Norcross, his political mentor and childhood friend, whose firm was losing business to the low-cost state government competitor.

Boxer's report, dryly entitled "Cost Analysis of Selected Local Government Units Joining the State Health Benefits Program," named no names. However, the $756,450 in broker fees paid over the past two years by Essex County went to Conner Strong, whose general chairman is Norcross. Essex County is run by County Executive Joseph DiVincenzo, the political boss who teamed up with Norcross to make Sweeney the Senate president and DiVincenzo's aide, Sheila Oliver, the Assembly speaker.

Essex County's $756,450 in fees were paid without proper authorization because the Essex County Board of Freeholders failed to pass a resolution in 2009 renewing the no-bid contract that has been held by Conner Strong for the past 14 years, Boxer asserted.

NJ Spotlight's story includes an interactive map on State Health Benefits Plan (SHBP). You can click on individual municipalities to find out if it is a member of the SHBP.

Ironically, it is union contracts that officials cited as one of the biggest barriers to switching to the State Health Benefits Plan. In many cases, local government contracts may offer more "Cadillac benefits" than the state plan.

Essex County's health insurance plan, for example, contains a $5 copay for doctor visits, compared to $10 in the state plan, and officials said union contracts bar any changes during the period covered by the contracts. Consequently, officials said they would have to negotiate any changes when contracts expire.

However, a union official with knowledge of the Essex County plan who asked not to be identified said the coverage actually is not as good as that offered under the state plan, despite the fact that latter is much less expensive. In fact, Boxer concluded that Essex County taxpayers would have saved $4,649,846 in 2009 and $4,919,046 in 2010 if they had been enrolled in the State Health Benefits Plan instead of the one contracted through Conner Strong.

Read the full story in NJ Spotlight: Watchdogs Target Insurance Brokers

NJ Spotlight is an online news service providing insight and information on issues critical to New Jersey.