Study: State Employees Paying More for Health Insurance than Peers

Georgia lawmakers requested a study in February in the amended FY 2015 budget to examine “why [State Health Benefit Plan] SHBP’s costs are higher than other comparable government employee health plans.” The study, conducted by Aon Hewitt on behalf of the Georgia Department of Community Health, is out, and you can almost see the teachers nodding in agreement. It found that Georgia teachers and other state employees are paying 29% more for their health insurance than the average employee enrolled in comparable state plans – or 17% higher when adjusted for state cost levels, demographics, and number of dependents on each plan.

The study compares the SHBP to state health plans from Florida, Kentucky, Mississippi, South Carolina, Tennessee, and the separate Board of Regents plan. When looking at average overall plan costs per employee, including employer subsidies, the SHBP ranks 2nd most expensive, with costs 11% higher than the mean. Aon Hewitt finds three main drivers of this high relative cost versus other states: that healthcare is more expensive and utilized more often in Georgia, that SHBP recipients are older and more female, and that SHBP recipients have more dependents on their plan. Once these factors are controlled for, the study finds that Georgia’s total costs per employee are actually 1% lower than in comparable states.

The study can’t, however, control away the costs that teachers and other state employees directly bear – their payroll deductions for premiums and out-of-pocket costs. SHBP enrollees face the highest unadjusted employee cost of all the comparable plans studied: 29% higher than the mean. Even employees who fully participate in the plans “wellness incentives” and don’t use tobacco face higher unadjusted costs than the average participant in all other comparable plans: 23% higher than the average of all plans. When adjusted for the location, demographic, and dependent factors mentioned above, Georgia employees have the second highest employee cost of all comparable plans and end up paying 17% higher than the mean.

The report offers ten options to lower costs. Most focus on ways to reduce total plan costs, such as implementing telemedicine options, setting up on-site health clinics for teachers, or moving to narrower networks of doctors. However, some key in on the bigger problem for the SHBP: the employee share of costs. Since Georgia passes off more costs of SHBP to its employees than comparable states, one option offered is for the state to increase its employer contribution to better match its peers. With Georgia’s tax revenues up year-over-year, you can bet that teachers groups will be pushing hard for some of these new revenues to be put towards this option.

10 comments

  1. John Konop says:

    if you did this…telemedicine options, setting up on-site health clinics for teachers, or moving to narrower networks of doctors………combined with allowing VA pricing on drugs and Living wills. I would bet you would see a material gain for all…..a real win-win solution….

  2. Charlie says:

    “Once these factors are controlled for, the study finds that Georgia’s total costs per employee are actually 1% lower than in comparable states.”

    Just thought that needed some emphasis.

    • Alex Rowell says:

      Fair enough – this is definitely important. Controlling for plan demographics and dependents definitely makes sense, although controlling for higher health care costs in Georgia is questionable – the state and employees must actually pay those higher costs, and state policies can impact health care costs and utilization overall.

      But this just further emphasizes that the state is falling behind its peers when it comes to how much teachers/employees are required to pay in cost-sharing. It’s a hypothetically simple fix, but a politically tough one because it requires increasing funding.

      • Charlie says:

        There’s no policy regarding education that someone doesn’t have the solution of “requires increasing funding”.

        We’re paying what other states pay for health insurance. Our teachers are paid well above our SE state neighbors’. We devote more of our budget to education than any state we touch. And now we have educators complaining that because the transportation bill doesn’t allow them to take user fees from roads above $3.00 per gallon, we’re somehow robbing them of education dollars.

        At some point, the education establishment is going to have to realize they’re part of the same state budget, they’ve been at the head of the budget line since the 1980’s, and any time someone asks what we’ve gotten for the extra money we get “quit demeaning the teachers” followed quickly by “but we still need MORE”.

        • Alex Rowell says:

          “We” being the employer contribution and employee contribution combined are paying what other states are paying for health insurance. Our teachers aren’t. When the problem is, quoting from the report, that “Georgia SHBP requires a greater proportion of overall health care cost to be borne by members,” then yes, a solution is to increase the state contribution share.

          • Charlie says:

            And as taylor notes, that’s part of the overall teachers’ compensation package. And our teachers are above the national average, and well above the Southeast average.

            This is a headline in search of a problem.

            • taylor says:

              It’s important to remember that this isn’t just an education issue. There are state employees paying these rates. As I said, it’s fair to look at total compensation when considering an employees insurance cost. I don’t know if teacher pay is good or bad, but I suspect that correctional officers, DFACS workers would argue that low 20s isn’t great compensation.

              • Charlie says:

                The non-teacher state employees have sat by for 8 years with a sum total of 1% pay raises while we’ve made sure we restored the “cuts” to education.

                They won’t be served well by advocating for more money to K-12 hoping it trickles down to their unrelated salaries/comp plans.

    • taylor says:

      Charlie, it looks like total costs (employee and employer share) are 1% less per employee. That’s great. But the employee portion is 17% higher, when controlling for the factors mentioned. It appears that the main point holds – employees, teachers pay more in Georgia than USG or other states.

      Now, if employees and teachers make more than those other entities, I don’t know that it is an issue. Total compensation vs one benefit.

  3. saltycracker says:

    How many teachers left GA to work in one of those states, adjusting for spousal transfers ?

    The total cost of pay and benefits are high compared to private workers in GA. Legislators fear them as fellow public workers and have been quick to grant “hidden” costs kicking the can down
    the road.

    We could pay working teachers more by letting full retirement benefits kick in at 62 or 65 not 52.

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