California Cities Pay Far More Than Market Rate For Health Care

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California cities and special government districts spend far more than the market average on employee health insurance, costing taxpayers billions of dollars, according to a Transparent California analysis.

The think tank, which collects a statewide salary and pension database, cited a 2018 UBA Health Plan investigative report that found that some cities in the Bay Area and some special districts were spending more than double the regional average of $ 9,381 on a health care plan.

Special Districts in California had the most expensive plans, including the Central Contra Costa Health District (Central San), where the average health care premium, at $ 29,923 in 2018, was triple the market average. and just behind the much smaller South Water Replenishment District. California.

Of Central San’s 283 employees, 48 ​​received medical plans priced at $ 51,148 or more, higher than any other bonus in the market, said Robert Fellner, executive director of Transparent California.

“Such expensive medical plans just don’t exist in the market at large, which is a clear indication that providers are exploiting the fact that these governments are happy to pay inflated prices with other people’s money,” he said. Fellner said in a blog post.

Fellner explained in an interview this week that he believes overspending happens because governments are not “super concerned with controlling costs.” For many districts and cities with high health care costs, employees pay nothing for their plans. If government employees were to pay part of the premiums, Fellner said there would be more pressure to control costs.

A Kaiser Family Foundation survey found that 92% of family health care plans had premiums below $ 26,000.

Newark, which requires employees to pay a portion of the premiums, had health care costs well below the market rate, at $ 6,580 per employee, according to the Transparent California report.

But paying the full cost of employee health care may be a way for governments or other employers to attract workers, some government officials say.

“The Bay Area is a highly competitive job market. To attract and retain the most skilled workforce, we must provide sufficient health care for the work of our employees, ”said Emily Barnett, communications and government relations manager for Central San. “Our employees have to navigate working with raw sewage and hazardous materials. Based on their work, Central San was to maintain the standard of health care for our employees, while committing to reduce costs. “

Central San has asked CalPERS this year to purchase health care plans, which will save $ 5.8 million this fiscal year, Barnett said in an email. “Prior to that, Central San was part of a pool of unique entities, which made the agency subject to high volatility due to health claims. Switching to CalPERS will deliver significant savings this year and will have an ongoing effect every year as we have joined the largest pool of CalPERS to achieve the best value at the lowest cost. “

The new average bonuses will be estimated at $ 21,340 per employee, which is still above the market average, but lower than in previous years. CalPERS offered the cheapest plan among the “multiple” vendor options, Barnett said.

The health district, which covers Walnut Creek, Concord, Lafayette, Orinda, Martinez, Pleasant Hill, Moraga, Danville and San Ramon, earlier this year approved a sewer service rate increase of about 20 percent in four. years, as well as an increase in recycled water tariffs.

However, it is not the only agency whose health care costs are higher than those of the market.

Forty-seven California cities had average health care costs more than double the market rate. San Bruno, with an average of $ 23,268 per employee, and Mountain View, with an average of $ 22,419 per employee, were in the top 10 cities. In East Bay, Pleasanton at $ 21,377 per employee and Alameda at $ 21,150 were in the top 15.

San Bruno Deputy City Manager Tami Yuki said the actual amount paid by the city for employee health plans averaged $ 18,263. This does not take into account “dental care, vision, prescription drugs and medical benefits for retirees,” she said, adding that “by contracting with the Teamsters Local 856 Health and Welfare Trust Fund for health benefits and a defined contribution plan, the City does not provide any direct financial contribution to retiree health benefits.

Of the 300 California Special Districts studied, 91 had health care costs twice the market average, according to the report.

Nancy Bronstein, Alameda’s director of human resources, said the city purchases its benefits through CalPERS and that in the most recently negotiated labor agreements the city has capped its contribution to medical benefits. She did not specify what the contributions are.

Pleasanton City Manager Nelson Fialho said that because the survey only provides summaries of health care costs, he “cannot see the details behind the data to provide an informed comment.” But he noted that Pleasanton uses two providers, Kaiser and Healthnet, and that the maximum premium paid by the city is around $ 2,050 for the family rate. Several options reserved for employees or employees plus one are inferior.

“As a result, the $ 21,377 seems high to me,” Fialho said in an email, noting that “we use the services of a broker to make sure we receive competitive rates.”

“Because I can’t see which plans were included in their ‘regional market’ data, it’s hard to say why it’s so low,” he said. “I know one of the possibilities is that there are a lot of low premium, high deductible plans on the market right now. In these plans, members have to pay significant expenses before their coverage takes effect. The premiums are low because there is much less coverage.


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