Like roughly 80% of Massachusetts workers, public employees receive health insurance as part of their compensation. The issue of how much active employees should contribute to the cost of that insurance has been controversial in every recent budget season. Since the cost of public employee health insurance is just under $1 billion, the employee share is a substantial question — a 5% shift has a $50 million budget impact comparable to elimination of the Quinn Bill.
The table below summarizes the recent proposals.
Employee Share 15% Employee Share 20% Employee Share 25% Employee Share 30%
Fiscal 2009 Enacted If hired before June 30, 2003 If hired after June 30, 2003 Governor's Fiscal 2010 If salary under $30,000 If Salary $30,000 to $50,000 If salary over $50,000 House Ways and Means Committee's Fiscal 2010 All
House Final Action for Fiscal 2010 If hired before June 30, 2009 If hired after June 30, 2009
Note that retiree shares have been left undisturbed in all proposals at 10% for persons retired before July 1, 1994 and 15% for those retiring thereafter.
Raising the employee health insurance share amounts to a pay cut. An employee at the 15% share level plan currently pays between $147 and $339 per month for a family plan (depending on the plan that they choose). So, an increase to 20% would work out to a pay cut of roughly $50 to $100 per month. An increase to 30% could be a paycut of over $300 per month. If the employee is at the lower end of the income range — say a legislative aide taking home $2000 per month — this could be a 15% cut in take-home pay. (Of course, that employee could ease the pain by shifting to a less expensive health plan.)
It does appear that state workers are paying less than the median among Massachusetts workers, which appears to be in the area of 25%. The Governor cites, in his policy brief on the GIC health insurance shares, a similar finding from a Kaiser family foundation survey that nationally workers contribute on average 27% for family coverage (but only 16% for individual coverage). Of course, some employers do not offer health insurance at all and many offer plans which are more limited than those offered by the Commonwealth, which most perceive to be very solid plans.
In the last budget season (FY2009), I opposed a increase in health insurance premium shares for public employees; in the Spring of 2008, it did not seem fair to be calling for a pay cut for public employees. In the most recent session with the huge economic downturn, I modified my position. I declined to co-sponsor amendments that would have blocked the House Ways and Means proposal to raise the share to 30%. I recognized that proposal as a bargaining position on what is always a contentious issue, but felt that some modification of the employee share was appropriate. In internal informal discussions, I advocated for a tiering approach that used a sliding scale. The Governor’s rigid tiers had odd edge effects (one wouldn’t want to get a raise from just under $50,000 to just over $50,000), but the idea was right — to protect the lowest income workers from rising health care costs.
I heard from dozens of public employees in my district opposing any change. I am completely respectful of their contributions and the good work that they do, but felt that in this year of widespread job losses, dramatically falling state revenues, tax increase proposals and service cuts, it was fair to adjust the share. Bottom line: I supported the compromise increase outlined in the table above. I note that I personally, as a compensated state legislator, will experience the same premium increase that other employees will experience as a result of the compromise non-tiered approach that the House adopted.
Of course, the Senate may need to go even further with premium increases as they attempt to balance the budget with even less money to work with.