Health Care Costs of Public Sector
Employees and Retirees
James Sauber, Research Director, National Association of Letter Carriers
Dan Givens, Chairman, NCPERS Task Force on Health Care Benefits

The adoption of managed health care programs may have helped constrain health care costs and lower utilization rates for most of the 1990s, but the nation today faces alarming trends in the cost and quality of health care. To help understand the depth of the problem, Jim Sauber, an expert in collective bargaining, pension and health care policy, reviewed how health care has changed since 1993 and the problems he anticipates in the next decade.

According to Sauber, the current health care crisis mirrors the crisis of a decade ago. As was the case in 1993, we have just come out of a recession, premium costs are were rising, and a growing number of Americans are uninsured. States, reeling from rising budget deficits, are again under pressure to cut benefits.

These trends are occurring despite radical changes in the type and quality of health care most Americans receive. At the beginning of the decade, half of Americans were in traditional fee for service health care plans; today, only 7% are covered by such plans. Managed care coverage has become the dominant type of plan, jumping from 27% of all Americans in 1993 to 50% in 2002.

Although most public employees at the federal level remain in fee for service plans, most state and local employers have moved to managed care. As one example, of those employees covered by CALPERS, 23% belong to a PPO, and 74% are in an HMO.

There are other disturbing trends in health care, Sauber noted. For example, employees face more cost shifting and cost sharing. The employee share of premiums rising and co-payments are up. Many employees and retirees are experiencing reduced coverage, and in some cases discontinued coverage.

Sauber suggested that NCPERS members should also be concerned about the future of the Medicare program. Medicare solvency is as serious a problem as Social Security, according to Sauber, but there is surprisingly little debate on Capitol Hill about the future of Medicare.

To consider how public employees should respond to this growing crisis, NCPERS created a Task Force on Health Care Benefits. Dan Givens, who chairs the task force, reviewed how the committee was organized and approached the issue when it met last year. The Task Force approved a resolution with several recommendations, which NCPERS’ board subsequently approved.

Jim Sauber, in addition to his work for the National Association of Letter Carriers, is the chief aide to the Chairman of the Employee Thrift Advisory Council. That group advises the Federal Retirement Thrift Investment Board on the operations of the Thrift Savings Plan, the federal government’s 401(k) plan.

Dan Givens is a paramedic fire captain with the City of Miami Fire Department and has served with this department since 1973. He also is chairman of the Miami Firefighters’ Relief and Pension Fund, where he has served as a trustee since 1980. He recently served with the Professional Firefighters of Florida dealing with legislative changes to Florida Public Pension Law. He is a member of the Florida Public Pension Trustees Association and has completed the Certified Public Pension Trustee program.