In a recent update to a January 1 study on state employee benefits, the National Conference of State Legislatures (NCSL) named the three principal causes for changes in state healthcare coverage:
*Rapidly rising commercial premiums
*State fiscal pressures
*Rising co-pay and deductibles, separate from established premiums
Reporting to the Center for State and Local Government Excellence (CSLGE) on the change in premiums, the Kaiser Family Foundation found that the average annual health insurance premiums increased nationally from $6,438 in 2000 to $13,770 in 2010, an increase of 114%. Couple that rise in premiums, co-pay and deductibles with a shrinking of state budgets, and it’s no surprise that most states are considering ways to cut employee healthcare coverage to relieve fiscal pressure.
California is no exception, and this month Inyo County made its own difficult decision regarding employee healthcare coverage. Rather than reduce or eliminate benefits, the county has chosen to cap benefits for both union and non-union employees at 2010 levels. This means that, as of Jan 1/July 1 2011, depending on the employee group, employees will begin paying any increase in healthcare costs out of their own pockets.
To give an idea of what this will mean in 2011, for an employee with a PERSCHOICE 80/20 coverage plan through PERS BlueCross, the cost for the employee only will rise to $43.45 per month. For the employee plus one, the cost will rise to $86.90 per month. And for the employee plus family, the cost of coverage will rise to $112.97 per month. The county will continue paying $472.83 per month for the PERSCHOICE employee only, $945.66 per month for the employee plus one, and $1,229.36 per month for the employee plus family.
As CAO Kevin Carunchio pointed out, these numbers for the employee aren’t actually that steep. “Employees continue to receive an arguably invaluable benefit for very small additional costs,” he said. “This seems like a pretty good deal, especially if you are one of the millions of American without any health insurance.”
Of course, as annual healthcare costs rise, and the county continues paying only the 2010 rates, employees will pay more and more out of pocket.
“I have not received a lot of direct feedback about this change,” Carunchio said. “However, I do not imagine employees were overly enthusiastic; nobody likes to pay additional costs for anything. Hell, I don’t like it much myself.” Yet Carunchio noted that the decision to cap healthcare costs offers a means to reducing fiscal pressure without resorting to cutting benefits, slashing salaries, or eliminating positions.
The action was first imposed upon appointed and elected officials as well as management and non-represented employees. It has since been agreed to in new labor agreements negotiated with four of Inyo’s six bargaining units, including the Deputy Sheriff’s Association and the Inyo County Employees association, which represents all Miscellaneous employees.
According to NCSL data, 3.4 million state government employees and retirees enjoy healthcare coverage nationwide. With dependents and family members included, that total comes to about 7 million. Inyo County offers a small sample, with its 373 full-time, 10 part-time, and 160 retired employees, of what kinds of solutions local and state governments will seek in the coming year to balance the ever-present need for employee healthcare, against the ever-growing local, state, and national budgetary pressure.