The SERB 2012 Report on Health Insurance Costs
The Research and Training Section of the State Employment Relations Board has released its annual report on the cost of health insurance in Ohio’s public sector. The 2012 report analyzes health care surveys completed by over 1,100 public employers in the state representing over 370,000 employees. Such amounts to an 84% employer participation rate that is very similar to past reports. The survey answers are representative of health care costs for employers and their employees as of January 1, 2012. The report is necessary reading for members of a negotiating committee as it offers useful comparative data and background information for numerous healthcare issues.
The statewide average for an employee’s share of the medical and prescription drug premium is 10.7% for single coverage and 11.5% for family coverage. In terms of actual dollars and cents, employees statewide are paying $55 per month for single coverage and $157 per month for family coverage. Among political subdivisions, employees of townships pay the least amount at approximately 5.5% of the premium for single coverage and 4.7% for family coverage. This translates into township employees paying $25 per month for single coverage and $64 per month for family coverage. Employees in cities are paying 8.4% for single coverage and 8.2% for family coverage. This amounts to city employees paying $43 per month for single coverage and $116 per month for family coverage. Employees of counties are paying 13.1% of the premium for single coverage and 14.3% of the premium for family coverage. These percentages require county employees with single coverage to pay $67 per month for single coverage and $198 per month for family coverage.
SERB also analyzes employee contributions by eight geographical regions in the state. Employees in the Dayton region pay the greatest share for medical and prescription drug insurance. Employees with single coverage in the Dayton region are paying 12.9% of the premium while employees with family coverage pay 14.2% of the premium. These employees are paying $65 per month for single coverage and $189 per month for family coverage. The employee share of the premium is least in the Warren/Youngstown region with employees contributing 6.3% of the premium for family coverage and 6.5% of the premium for single coverage. This equates to $34 per month for single coverage and $85 per month for family coverage.
It is also interesting to examine SERB’s report on medical plan design. The report identifies the number of medical plans by deductible amounts. Statewide, 30.3% of medical plans have deductibles for single in-network coverage in the amount of $100 or less, while 29.3% of the plans have deductibles for such coverage in an amount between $125 and $400. For in-network family coverage, 28.9% of plans statewide have deductibles in the amount of $200 or less, while 29.3% of the plans have deductibles between $250 and $800. After the deductible is reached, the percentage of costs paid by employees until they reach their out-of-pocket maximum amount is called co-insurance. 33.7% of plans statewide for in-network coverage do not require an employee co-insurance contribution while 31.2% of plans require a maximum employee co-insurance share of 10%. The statewide median out-of-pocket maximum amount for in-network coverage is $1,225 for single coverage and $2,500 for family coverage.
The SERB report also provides plan data for prescription drug costs. The statewide median co-pay amounts for a 30 day drug supply under the “three tier” option most common in Ohio are as follows: $10 for generic; $20 for brand and $40 for non-formulary brand. SERB notes, as explained herein, that the employee premium contribution for prescription drug coverage is figured into the employee’s medical insurance premium contribution in 86.6% of reporting jurisdictions.
While the employee contribution to health care costs is always of prime concern in labor negotiations, it is also useful to look at the history of premium costs for medical and prescription drug coverage. For 2012, the average premium for medical and prescription drug coverage statewide is $506 for single coverage and $1,339 for family coverage. This represents a 6.8% increase for single coverage and a 7.0% increase for family coverage. SERB shows in its report that from 1993 through 1999, premium increases were modest at around 4% per year. From 2000 through 2005, annual increases in premium amounts were close to 15%. Increases have appeared to moderate since then, as the increases for 2012 were the largest since 2006 for family coverage and 2005 for single coverage.
The report also touches on dental and vision insurance. When dental insurance is carved out from medical and prescription drug coverage and employees contribute to the premium, employees statewide are paying $4.50 per month for single coverage and $13.70 per month for family coverage. 61% of the jurisdictions have annual dental maximums of $1,000 per person. SERB notes that the plans can vary drastically with some employers reporting plans including $4,000 annual per person maximums. When vision insurance is carved out and an employee is required to contribute, the employee is statewide paying $2.48 per month for single coverage and $8.06 per month for family coverage.
Opt-out provisions are often discussed by employees in anticipation of negotiations. Under these provisions, employees are paid by the employer for not enrolling in the employer’s health insurance plan. According to the SERB report, opt-out provisions are offered statewide in 44% of jurisdictions. The average incentive payment for an employee opting-out of single coverage is $1,392 per year while the average incentive payment for an employee to opt-out of family coverage is $1,990 per year.
High Deductible Health Plans are becoming more popular across the state, as they now make up 22.3% of plans statewide, compared to 17% in 2011. When such plans are offered in conjunction with a Health Savings Account or Health Reimbursement Arrangement, 50% of employers annually contribute to the account of single coverage employees in an amount between $1,000 and $1,999. 14% of employers annually contribute to such accounts in an amount over $2,000, while 36% of employers contribute less than $1,000. For family coverage employees, 47% of employers annually contribute to such accounts in an amount between $2,000 and $3,499. 19% of employers annually contribute to such accounts in an amount over $3,500, while 34% of employers contribute less than $2,000.
I wrote a similar analysis for Police Beat of SERB’s 2010 report on the cost of health insurance in Ohio’s public sector. A comparison of 2010 report with the 2012 report does not evidence cause for alarm. Generally, whether by percentage or actual amounts, some averages of employee costs have modestly increased while others have remained constant or decreased. While we cannot control the employer’s objectives at the table, the SERB report on healthcare provides a tool to measure the reasonableness of both our position and the employer’s position relative to external comparability.