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Neighbors Growing Together | Apr 16, 2014

State workers need role in health costs

By Deborah D. Thornton, research analyst with the Public Interest Institute | Mar 29, 2012

Health care benefits are a hot

topic.

A major concern is benefits and

costs for government workers.

Many states – 19 in FY2009 –

have zero funds set aside to fund

retiree healthcare benefits.

Another seven have only funded

25 percent of their liability,

according to a report by the Pew

Center on the States.

Only two states, Arizona and

Oregon, have over 50 percent of

their health-care liabilities funded.

In total, the states only have about

5 percent of the expected liability

set aside.

With the continuing growth in

health-care expenses,

this is a significant problem

for these states and

their taxpayers. Many

states are making changes

in the structure of

retiree healthcare benefits

to address this longterm

liability.

Iowa is one of the states,

according to the Pew data, which

has no funds set aside to pay current

or future retiree health-care

benefits. Instead, state government

has been paying these expenses

from current tax collections. As of

FY2009, the amount anticipated

for health-care expenses of current

and future government retirees in

Iowa was just over $538 million,

or over half a billion dollars. This

is about one-twelfth of all state

spending and a significant liability

to Iowa taxpayers.

Based on these estimates, the

“required” annual contribution for

Iowa retiree health-care costs in

FY2009 was $56.8 million. This

money should have been set aside

in reserves, as the Iowa Public

Employees Retirement System

(IPERS) money is, to grow and be

available to pay the health-care

costs of retirees. In FY2009, only

42 percent of that amount was

paid in.

Additionally, most Iowa state

government workers do not pay a

monthly health-care insurance

premium. We are one of only six

states that pay 100 percent of

health-care insurance costs for

employees and their families.

According to the 12th annual Iowa

“Employer Benefits Study,” by

David P. Lind and Associates, the

average premium paid by privatesector

workers in Iowa for family

health-care plans is $346.66 per

month, up from only $180 a

decade ago. The average amount

paid by private-sector workers for

an “individual only” plan is $70.

In contrast, those few state government

workers who are required

to help pay for their individual

insurance pay only $14 per month,

$56 less per month than a privatesector

worker.

Nationwide, 38 percent of the

states require their single employees

and/or retirees to pay from 29

to over 60 percent of their health

insurance premium, according

human resources benefits group

The Segal Company. For employees

with families, 56 percent of

states require at least a 29 percent

personal contribution.

The FY2013

budget proposed by the

House Republicans calls

for all state workers,

including legislators and

other elected officials,

to pay $200 a month

toward their health

insurance. This is still less than

the $350 per month the average

Iowa family in the private-sector

pays – and less than most government

employees in other states.

According to Speaker of the

House Kraig Paulsen, “Taxpayers

can no longer afford to carry the

full burden. ... Asking all employees,

including state legislators, to

contribute a reasonable $200

monthly payment towards their

own health care is the right thing

to do.”

Unemployment in Iowa remains

over 5 percent, Occupy Wall

Street and union protestors are

continuing to cry for “fairness”

towards the 99 percent. When private-

sector families are paying

$350 per month or more towards

their health insurance, it seems

only “fair” that government workers

pay at least $200. Speaker

Paulsen and the Republicans in

the Iowa House of Representatives

are right. At the very least, they

should adopt this plan for themselves

and other elected officials.

Next they should address the

unfunded liability of the retiree

health care. Then the state will

continue to move toward sound

fiscal health, treating all taxpayers

fairly.

The views expressed in this column

are those of the author

Deborah D. Thornton, research

analyst with the Public Interest

Institute, and not necessarily those

of the Public Interest Institute in

Mount Pleasant.

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