State policyholders save big with new online bidding process
Following a long advocacy effort, union representatives on the School Employees Health Benefits Program (SEHBP) and State Health Benefits Program (SHBP) design committee have won over $1.6 billion in savings over the next three years for their members and other New Jersey taxpayers.
In 2016, the union representatives on the design committees brought forward a proposal to dramatically change how the state bids for employees’ prescription drug benefits. While the state initially resisted the proposed change, the union representatives finally won state cooperation by demonstrating that New Jersey had the opportunity to save double digit percentages on its prescription costs without any changes to the benefits it offers employees. The change consists of using an online auction to make prescription drug benefit providers bid against each other in a transparent and much more competitive bidding process.
Legislation enabling such a bidding process was passed earlier this year and the final results are in. OptumRx, Inc. won the bid for a three year period beginning Jan. 1, 2018 with a price that is more than 10% below what the state projected to spend under the current prescription vendor. The state, local employers and public employees together will save at least $1.6 billion during the three year OptumRx contract.