Lower premium sharing, more generous benefits, lower deductibles and overall lower cost-sharing. These are the characteristics of the health benefits of state employees compared with workers in the private sector. While there are variations among the states, the fact remains public employees at the state and local levels have a very good deal paid for by taxpayers who are paying significantly more for their own health care.
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State Employee Health Care Report August 2014
The project found that in 2013:*
• States spent $30.8 billion to insure 2.7 million employee households,† a slight uptick in spending from 2011 and 2012—the earliest years for which Milliman compiled data—after adjusting for inflation.‡
• The average per-employee per-month premium for coverage of employees and dependents was $963. States paid $808 (84 percent) of the total, and employees covered the remaining $155 (16 percent). Employees paid an additional $70 per month, on average, in cost-sharing elements such as deductibles, copayments, and coinsurance.
• The average per-employee premium masks sharp differences across the states. Arkansas, Mississippi, New Mexico, South Carolina, and South Dakota, for example, had relatively low per-employee premiums, whereas the average per-employee premiums for Alaska, New Hampshire, New Jersey, Vermont, and Wisconsin were comparatively high.
• One factor underlying differences in per-employee premiums is variation in “plan richness,” a commonly used term of art within the actuarial community. Richness reflects the relative cost sharing between an employer and employees based on the required deductibles, copayments, and coinsurance. State health plans were generally “rich,” paying on average§ 92 percent of the typical enrollees’ health care costs. By way of context, these plans would be designated “platinum” plans within the new health insurance marketplaces.¶, 4
• Annual deductibles—the amount employees must pay for covered health care services before the health plan begins to pay—are a significant determinant of plan richness. A common cost-containment strategy among many private sector employers in recent years has been the introduction of high-deductible health plans, which result in lower premiums. States have been relatively slower to offer such plans, and in those where they were offered, relatively few employees chose to enroll in them. Nineteen states offered at least one plan with an annual deductible of $1,500 or more, up from 16 states in 2011. Among those 19 states, a median of 7 percent of state employees enrolled in them. Nationwide, only 4 percent of state employees enrolled in such a plan. Forty-five percent were enrolled in plans with no deductible.
Compared with:
2013 Employer Health Benefits Survey
Most often, employers require that workers make a contribution towards the cost of the premium. Covered workers contribute on average 18% of the premium for single coverage and 29% of the premium for family coverage, similar to the percentages contributed in 2012 and relatively unchanged over the past decade. Workers in small firms (3 – 199 workers) contribute a lower average percentage for single coverage compared to workers in larger firms (16% vs. 19%), but they contribute a higher average percentage for family coverage (36% vs. 26%). Workers in firms with a higher percentage of lower-wage workers (at least 35% of workers earn $23,000 or less) contribute higher percentages of the premium for single coverage (23% vs. 17%) and for family coverage (39% vs. 29%) than workers in firms with a smaller share lower-wage workers.
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