The 46-32 vote followed hours of often bitter closed-door debate among Democrats, then hours of emotional public speeches on the Assembly floor. Uniformed state troopers escorted several people from the gallery for disrupting the debate with cheers and jeers.
The measure was fast-tracked through the Legislature after Gov. Chris Christie, a Republican, struck a deal with Democrats and Republicans who lead both houses. Just 14 Democrats voted in favor of the measure, with 32 opposed. All Republicans who were present voted for it.
The Senate passed the measure Monday, also without a majority of Democrats backing it. Christie is expected to sign it soon.
"I am going to guarantee you when it's finished (it) will become a national model and will be hailed across the country as an example of bipartisanship that the president and the Congress can only aspire to," Christie said of the legislation.
About 8,000 union protesters jammed the street outside the Capitol before debate got under way. It was their third Statehouse rally since the bill was introduced 10 days ago. On Thursday, they staged a New Orleans-style funeral procession, complete with a brass band and a black hearse with a sign draped on it reading "The Soul of Democratic Party."
"We're going to keep fighting," said Andrea Rastello, who teaches second grade in Wayne. "We are dedicated in our opposition, but we're going to have to make a lot of sacrifices in our families."
Rastello said she has already started looking for tutoring jobs to augment her income, and she will have to scramble to find family members to replace paid child care once she's forced to pay more for benefits.
Most Democrats opposed the bill because it imposes new health care contributions on a half-million government workers through legislation and suspends collective bargaining over health benefits. Opponents called the bill union-bashing; proponents insist higher contributions from workers are needed to shore up the state's retirement systems, which are underfunded by $110 billion. The bill is meant to bring public employee benefits more in line with the private sector, then restore bargaining after a four-year hiatus.
Assembly Democratic Leader Joe Cryan said the bill "ignores the collective conscience of the majority" by trampling on collective bargaining and ramming through legislation in 10 days. He said the outcry over a provision in the original bill restricting access to out-of-state doctors and hospitals was so widespread that two amendments have since been offered. The Assembly voted to strike the restriction, sending the amendment back to the Senate for a vote Monday.
"You want to know why this is wrong? This is wrong because you don't do health care changes in 10 days," Cryan said.
But Declan O'Scanlon, the GOP's Assembly budget officer, said the bill restores fiscal sanity to runaway retiree health and pension costs.
Without the changes, he said, New Jersey's retiree costs would rise so dramatically that it would be impossible for the state to continue to aid public schools, provide property tax relief to the elderly and disabled or fund health clinics for the poor.
"Without reform to bring our system to full funding, we will need a tax increase on every household in New Jersey of $2,500 - that's not one time, that's every year for the next 30 years," he said.
The bill requires 500,000 teachers, police, firefighters and other public employees to pay a portion of their health care premiums based on income. An employee earning $60,000 who now pays $900 toward health insurance would see their yearly costs rise to $2,056 for single coverage or $3,230 for a family plan, after a four-year phase-in.
People who are already retired, and those with at least 20 years of service, would continue to get free health care in retirement. Collective bargaining over health care would resume in four years.
Workers' pension contributions would also rise by at least 1 percent of salary immediately; some workers would see an additional increase phased in. For example, teachers would see their pension contributions increase from 5.5 percent to 6.5 percent of salary now and by an additional 1 percent over seven years. Police and firefighters' contributions would increase to 10 percent, from 8.5 percent, immediately.
Retirees' cost-of-living adjustments would be suspended.
A Kaiser Family Foundation survey last year found that workers with employer-sponsored health plans paid 19 percent of the premium on average for single coverage and 30 percent for family coverage. State and local government workers paid the lowest percentage of their premiums - an average of 9 percent for single coverage and 25 percent for a family plan.
Other states have also been seeking to force public employees to pay more for benefits and limit collective bargaining rights. A GOP-led effort in Wisconsin calls for public workers to pay more for health and pension benefits beginning in late August unless a lawsuit by a coalition of unions is successful.
In Ohio, Gov. John Kasich in March signed a law limiting bargaining rights, which has yet to go into effect. And in Michigan, the Republican state Senate has passed measures to require most public employees to cover at least 20 percent of the cost of buying their health insurance coverage, with some flexibility for local bargaining units.
The Massachusetts House passed a bill in late April stripping public-sector unions of the right to bargain over health care.