Government Workers’ Health Benefits Cost 40 Percent More Than Private Workers
I recently gave critical treatment to an advocacy piece by an employers’ group, which promoted harmful, government-driven, solutions to price transparency in health care. This entry will argue that private employers are not entirely ineffective.
The media never fails to give good coverage to the Kaiser Family Foundation’s Annual Employer Health Benefits Survey, which includes “almost three thousand interviews with non-federal public and private firms”.
The Kaiser Family Foundation Survey reports a total premium for single coverage of $5,884 per employee, of which the worker paid $999 and the employer paid $4,885. (Economically speaking, the employee actually paid the entire cost, because the employer would otherwise have paid the balance as wages. However, our culture struggles to accept this, so we’ll let the figures stand as reported.)
The Kaiser Family Foundation divides its sample in different ways. It reports coverage by household size. It reports coverage by employer size. What it does not do is separate he public-sector benefits from the private-sector benefits. This is a shame because the report is freely available and heavily reported.
A less accessible report, published by United Benefit Advisors for its clients, tells a disturbing tale. Last year, public-sector health benefits cost $8,551 per employee while private-sector coverage cost only $6,040.
That 40 percent premium for a public-sector worker is not captured by the Kaiser Family Foundation. Indeed, because the Foundation does not survey federal-government employees, it does not even report those who might be the highest cost. Even if the latter include the military, the premium for government benefits is remarkably high.
When people complain about the cost of private coverage, they likely don’t know that many of the guilty parties are government employees (including the ones who would be involved in a so-called “single payer”, government monopoly, health system).
The reports do not publish the number of public-sector workers versus private-sector workers. If they did, simple arithmetic would likely show that the rapid increase in health spending over the decades is largely explained by growth in public-sector health benefits, not private-sector ones.
“(Economically speaking, the employee actually paid the entire cost, because the employer would otherwise have paid the balance as wages. However, our culture struggles to accept this, so we’ll let the figures stand as reported.)”
This is so true, not just with health care costs, but so many things! People see things these types of things as “free” and feel disconnected from taxes on other entities, etc. rather than realizing that costs are ultimately borne by the taxpayer/consumer.
Yes PJ,
You are quite right. I have worked as a contractor next to “captive” employees who got FMLA, sick leave, vacation leave, pregnancy leave, health insurance and god knows what else.
I aways earned more than twice their hourly pay by going bare and unbenefitted. Of course the employee pays, though the “benefits” tax the young, healthy, single, child-free male in favor of the old, infirm, married and breeding female. If you are in the latter group, enjoy! If you are in the former, become a contractor or emigrate!
A former CEO of a health insurance company told me once in discussing employer sponsored health insurance plans that when you’ve seen one account, you’ve seen one account. There are significant differences from one to another even when the employers are of similar size and the benefits structure is comparable. Average age and health status of the employee population and their families can differ materially. So can regional differences in medical input costs and local physician practice patterns.
On the public sector side, there is still a preponderance of plans with very low deductibles and even first dollar coverage, especially in plans covered by collective bargaining agreements, whereas high deductible plans are gaining more market traction among private sector employers most of which are non-union. I doubt that public sector employees and family members are any less healthy on average that people who get their health insurance from a private sector employer. Any differences in medical claims per covered life are probably attributable to the factors noted above.
Last year, public-sector health benefits cost $8,551 per employee while private-sector coverage cost only $6,040.
That is a really big difference. And you’re right – if the media doesn’t mention it, no one is going to hear about that.
The media does just happen to conveniently leave part out.
“If they did, simple arithmetic would likely show that the rapid increase in health spending over the decades is largely explained by growth in public-sector health benefits, not private-sector ones.”
They certainly would not want that small detail get out. Maybe public sector benefits should be evaluated.
You really think that the cost of health care in the US is driven by the cost of providing it to only 15% of the workforce? Yeah, simple arithmetic. Simple as in simple-minded.