Public, Private Employees Feeling Pinch of Rising Health-Care Costs
The price of health care rocketed so high this year that Patricia Garcia, a single mother with three young children, decided she had no choice but to pull her kids off her insurance plan.
Garcia has a steady government job, the kind that a generation ago meant reliable benefits for workers raising families. But with health insurance premiums soaring, public as well as private employees are increasingly feeling the pinch.
For Garcia, who makes about $34,000 a year as a secretary in the city of Oxnard’s parks department, the breaking point came in May, when her family’s health insurance costs jumped from $300 to $453 per month.
“I just couldn’t afford to pay that out,” she said. “I already rely on everything in my paycheck to pay my bills.” Her solution? She took her children off her policy and left them without insurance for three months so they could qualify for Healthy Families, the state’s health-care program for children of the working poor.
For many government workers throughout California, the surging cost of health care has eclipsed other job worries, such as flat wages. It emerged as the central sticking point in most contract disputes this year, such as the conflict that led to the transit mechanics’ strike in Los Angeles County. And as the state’s financial troubles squeeze money from county and city budgets, experts say, the labor strife is likely to worsen in the new year.
“We have seen people fighting very hard to hold the line,” said Ken Jacobs, a labor policy specialist at the UC Berkeley Labor Center. “Health benefits are something that people see as essential to their family security. In general, we have seen a much greater willingness to forgo wage increases in order to maintain health benefits. It’s just a bedrock issue for people.”
In Los Angeles County, Metropolitan Transportation Authority mechanics walked off the job for 35 days this fall in an effort to force their employer to continue providing relatively generous health-care benefits. The strike ended without agreement on that issue; negotiations are to continue with a mediator.
In San Joaquin County, nearly 3,000 social workers, medical aides and other county employees went on strike this summer after their health premiums rose 29%, forcing some workers to enroll their children in Healthy Families.
In Monterey County, workers staged walkouts over a similar issue, pushing their Board of Supervisors to reduce health premiums for employees.
The health-care conundrum is certainly not confined to public agencies. Insurance costs have been rising nationwide, spurred by higher drug prices, expensive new medical technologies and bigger bills from hospitals. In California, a shortage of nurses and the cost of retrofitting hospitals to guard against earthquakes have compounded the problem.
Overall, private sector employees pay a greater share of their health insurance than those who work for public agencies, according to a recent UC Berkeley study.
In 2002, fewer than a third of private employers, 30.6%, paid the full cost of their workers’ health insurance premiums, compared with 39.9% of government employers. And 4.1% of private employers paid none of the premiums at all, compared with 2.4% of public employers.
Even so, some observers suggest that the uncertainty over health care is especially jarring for government workers, who were attracted to public service partly by its reputation for security and predictability.
“They’re not getting big pay. But what they get is job security, fixed hours, good benefits and a good pension,” said Barbara Maynard, a consultant to the Coalition of County Unions in Los Angeles. “They want stability in their lives. They don’t have any wild cards.”
Instead, many public employees are now being asked to shoulder some of the health-care burden. Unions representing nearly 90,000 Los Angeles County employees reached agreements with the county that, for the first time, require workers to foot part of the bill if premiums spiral beyond a certain level in 2005 and 2006.
Inyo County, home to most of the rural Owens Valley, has picked up the full cost of employees’ health insurance premiums for years. But after a dispute over a contract that ended up in mediation, employees finally agreed to designate a percentage of their salaries for health care.
State workers, too, are bearing an increasing share of the cost. Until 1991, the state generally paid the full health insurance premiums for unmarried Civil Service employees and 90% for those with families. Now, after years of medical cost increases, both single employees and those with dependents will pay 20% of their premiums, starting in January.
“We have lost ground,” said Jim Hard, director of the Civil Service division of the California State Employees Assn.
“Our union does not believe this is something we can solve in negotiations,” Hard said. “This is a national problem. It’s going to take a national solution.”
Lawmakers in Washington have yet to squarely tackle the issue. When it comes to health care, Congress has been more focused on setting up a new prescription drug benefit for seniors, reforming the Medicare system and helping the 43 million Americans who have no health insurance at all. Some Democratic presidential candidates, however, have made affordable health coverage a central theme of their campaigns.
In California, where state lawmakers continue to grapple with a multibillion-dollar budget shortfall, even Patricia Garcia’s strategy for insuring her children may not be an option for long. As part of his plan to close the budget gap, Gov. Arnold Schwarzenegger has proposed freezing enrollment in Healthy Families.
Statewide, the health-care costs borne by public employees vary widely, depending on the benefits their unions negotiate with their employers, the health plans they choose and whether they are single or have dependents. The MTA mechanics, for example, pay no more than $6 per month in health insurance costs. Their union offered to boost the workers’ share, but insisted that the MTA pay millions more to maintain benefits at the current level.
Other government workers have seen their health expenses climb steeply for several years. In California, about 1.2 million public employees and their dependents get health insurance through the California Public Employees’ Retirement System. Many city and county governments use CalPERS health plans for their employees.
But even the giant pension fund, one of the nation’s largest purchasers of health care, has proved unable to leverage its buying power to hold costs down. In 2003, CalPERS weathered a 24% increase in health insurance premiums, followed by a 16% boost approved for the new year. Some members have seen their out-of-pocket costs double, and now some cities, counties, school districts and other public agencies are considering leaving the CalPERS health plans in favor of cheaper coverage on the open market.
Riverside County did just that in 2003 and saved almost $3 million by contracting directly with insurance carriers, such as Kaiser Permanente.
Like other public entities in Southern California, the county found that the average age of its employees was lower than that of CalPERS’ membership as a whole. And younger people, as insurers well know, are generally healthier and require less costly care than older people. Health care also tends to be cheaper in Southern California, where there is more competition among hospital chains than in Northern California.
“We ended up saving money, and the savings went to our employees,” said Jeanne Groen, benefits manager for Riverside County. “And our benefits are richer too.”
CalPERS, for its part, is researching ways to hold down costs for its members. One idea is to offer a flexible benefits plan, which could result in lower premiums for workers who choose bare-bones coverage. Another is to move toward so-called regional pricing, which would mean more affordable insurance for workers who live in areas with cheaper health services.
So far, relatively few public agencies have pulled out of the CalPERS system despite the rising costs. Clark McKinley, a CalPERS spokesman, said that only 27 of the program’s 1,100 public agencies plan to leave in 2004. “Why would you want to leave a big ship for a rowboat?” he asked. “Most of our public agencies are trusting us that we can navigate the crisis.”
