State workers paying less than most for health benefits
Pennsylvania taxpayers and state workers are paying more this year for state employees' health benefits. Even so, the typical commonwealth employee pays less than the national average toward his or her health insurance costs, according to a recent state-by-state analysis.
Starting this July, state employees contribute 5 percent of their salaries — up from 3 percent — toward their health care coverage.
Even with that increase, many employees will continue to pay a discounted rate. Christy Leo, spokeswoman for the Pennsylvania Employee Benefits Trust Fund, said nearly three-quarters of the fund's 73,500 enrollees participate in a health incentive program that lowers the rate to 2 percent a year.
“Our incentive would be to keep everybody healthy, that way you wouldn't have high-dollar claims,” Leo said.
A report from the Pew Charitable Trusts and the MacArthur Foundation last month found the average state employee nationwide pays $1,860 a year.
According to Leo, the average state employee earns $50,000 a year. At a 5 percent rate, his or her cost could be $2,500. At the 2 percent rate paid by nearly three-quarters of enrollees, it would be $1,000.
Maria Schiff, director of Pew's state health care spending project, said the average reflects a wide range of contribution rates across the states.
Pew said the study was the first of its kind, an attempt to offer a nationwide benchmark for an area where costs are rising.
Pennsylvania was the only state that did not provide its data for the study. State officials blamed a miscommunication through a third-party accumulating the data.
The Pew report said state government benefits are typically comprehensive and compared them to rich “platinum” level coverage available in the health insurance exchanges under the Patient Protection and Affordable Care Act.
A Kaiser Family Foundation survey in 2013 found private-sector employers with more than 200 employees contributed an average of 73 percent toward insurance premiums. According to Pew, state governments contributed an average of 80 percent.
Karen Shastri, a faculty member at the Katz Graduate School of Business at the University of Pittsburgh, said the public sector traditionally offers generous benefits to compensate for lesser salaries compared to the private sector. But the costs are likely to climb, she said.
“We know health care costs are going to continue to increase,” said Shastri. “Whose burden is that going to be, individuals or the taxpayers?”
Last year, Pennsylvania contributed more than $794 million to the trust fund, up about $58 million from the year before.
Those figures do not include contributions for employees in state government entities outside the governor's jurisdiction, such as the Pennsylvania State System of Higher Education.
Starting this July, Pennsylvania's contribution rose from $11,050 to $11,830 annually per employee.
The trust fund did not provide information about how much it pays out each year, but Leo said “claims cost are at or below industry standards.”
The trust fund is not subject to the state's Right-to-Know law.
Rick Dreyfuss, a senior policy fellow with the Harrisburg-based free-market think tank Commonwealth Foundation, said the salary-based contribution is not a true reflection of health care costs.
“Health care is not a function of pay,” he said.
At Pew, Schiff said Pennsylvania is unusual but not alone in offering salary-based insurance payments. New Jersey began a similar system a few years ago.
In Pennsylvania, employer and employee contributions are determined based on projections for how much the trust fund expects to spend in claims, said Dave Fillman, executive director of AFSCME Council 13 and co-chair of the trust fund board. The board consists of seven union representatives, and seven commonwealth representatives.
Fillman said the board tries to stay “ahead of the curve” by figuring out ways to grapple with rising costs without increasing employee contributions.
Increased copays or carving out costs for special services or generic prescription deals are some alternatives, he said.
“Those are the kind of things you want to be creative with instead of going right to the employee and zapping them,” Fillman said.
Melissa Daniels is a staff writer for Trib Total Media. She can be reached at 412-380-8511 or firstname.lastname@example.org.