Public vs. private: Where does health insurance stand?

A national survey says the cost to private-sector employers for health insurance is less than half that paid by state and local government.

By ED RUNYAN

VINDICATOR STAFF WRITER

What used to be a manufacturing industry standard — a zero worker contribution to health care — is a thing of the past.

As American companies saw their profits dwindle, and their health-care bills skyrocket, many downsized their work force and their health-care plans. Today, workers at most businesses pay upward of 20 percent of their health-care bill — if they have health insurance at all.

Government, however, has a long way to go to match its business counterparts, a Vindicator survey of local government health-care benefits shows.

On a national level, health care is now on the front burner as the Obama administration seeks to provide health care to up to 46 million Americans not now covered and Congress considers taxing health insurance plans costing more than $13,000 per year.

It’s also a hot-button issue for local government, especially Warren, which has been hit hard by income tax declines and health-care cost increases.

Just last week, Warren workers tentatively approved paying part of their health-care premiums for the first time. But that came after the city already had laid off 25 police officers, 11 firefighters and 20 other city employees to balance the city’s budget.

Health-care history

Paul Heltzel, a Trumbull County commissioner known for his knowledge of the business world, said government health care in the area has evolved over the past 40 years, but has always been a step behind business.

During World War II, private industry started offering benefits, including health care, to attract workers at a time when the federal government controlled wages but didn’t control benefits.

By the 1980s, government workers had achieved equality with private industry on health care, Heltzel said.

But businesses have cut their benefits in the years that followed, as they fell on hard times. Government is again following the private-industry lead, Heltzel said.

Mahoning County employees started paying 10 percent of their health care in 2003. Trumbull County employees started contributing 10 percent in 2007.

Tony Paglia, vice president for government affairs for the Youngstown/Warren Regional Chamber of Commerce, said government bodies need to be forced to make some of the same adjustments regarding health care that private industry has made.

“We at the chamber think the governments need to cut costs by having their employees pay their share as private industry does,” he said.

Government workers gain

One of the most comprehensive survey of wages and benefits nationally is in a report from the U.S. Department of Labor. It showed last December that an average state and local government worker earned substantially more in 2008 in both wages and benefits than the average worker in private industry.

The wages and benefits of the average government worker were $39.25 per hour, while the figure for a private-industry worker was $27.35.

The survey said the average government worker’s benefits cost taxpayers $13.38 per hour; benefits of an average private-industry worker were $7.98.

In the area of health insurance, the hourly cost for a public employee was $4.25; the health-insurance cost for the average private-industry worker was less than half that at $1.95 per hour.

Susan E. Quimby, former Mahoning County human resources director, said there are still government employees who earn relatively low wages. “Having a good benefit plan is definitely an incentive to be able to get good employees and keep them,” she said.

John Filak, regional director of the Youngstown office of the American Federation of State, County and Municipal Employees union, said many of the statistics quoted are probably accurate, but rather than focus on the need for workers to compete in a “race to the bottom” of the wage-and-benefits scale, it might be time to look at the reason why private industry has found itself unable to provide decent wages and benefits.

“Unfortunately, the private sector has been going backward at a remarkable rate,” Filak said. “While public employee benefits have stayed the same or gotten slightly better, private industry has cut to the bone.”

As for public sector wages now being higher than private, one reason for that is that public sector employees average about 15 personal days per year. Most private-sector employees don’t get sick leave, he said.

Private industry lags

Private industry doesn’t readily share information with the public about its benefit offerings, but anyone who talks to friends and relatives knows all too well that standard health-care benefits are anything but standard today, with some companies requiring employees to pay half or even all of their health-insurance premium.

The Obama administration said early this year that more than half of all personal bankruptcies are caused by medical bills.

Conversely, government workers don’t appear to be having such problems.

The U.S. Bureau of Labor Statistics said in October 2008 that 87 percent of state and local government employees have access to medical-care benefits, 55 percent have access to dental-care benefits and 38 percent have access to vision-care benefits.

By contrast, only 71 percent of private-industry workers have access to medical-care benefits, 47 percent have access to dental care and 28 percent have access to vision care.

National surveys of employers in the public and private sector show that workers who do have access to health insurance through their employer are paying larger and larger amounts for it.

A study by the Kaiser Family Foundation said the average cost of a family health-care plan in 2008 for a worker in a company with less than 200 employees was $12,091 per year, with the employee contributing $4,101 of that, or 34 percent.

Kaiser, a nonprofit, private foundation focusing on health-care issues, said the cost for an employee working for a company of 200 or more workers was $12,973, with the employee paying $2,982 of it — or 22 percent.

Another survey, conducted annually by Stamford-Conn.-based professional services company Towers Perrin, said its research of 500 mostly large companies and cities across the U.S. in September 2007 showed that the average cost of health care was $9,144, with employees paying about $2,064 of it ­— 22.6 percent.

The report notes that those companies performing the worst during fall 2007 were the ones with the highest cost-per-employee for health insurance, with the highest-performing companies paying $8,532 per employee and low-performing companies paying an average of $10,200 per employee for health care.

The report notes that employers were paying 39 percent more for health care in 2007 than they did in 2003, while employees were contributing 61 percent more than in 2003.

Controlling costs

A representative from the Ashtabula factories of Cristal Global, a chemical company, spoke in Howland last year about the aggressive wellness plan he runs there that has resulted in a zero increase in the health-care bill for more than six years.

Tim Moga, a nurse and occupational health coordinator for the factories, said one of the keys is a mandatory physical for all workers every two years to catch problems at their early stages. Employees are also offered health information on a regular basis.

Jason Loree, Boardman Township administrator, said one of the things the township has done to reduce health-care costs is make the effort to have the same language involving health care in all employee contracts.

Boardman’s union employees pay 10 percent of premiums, while nonunion employees pay 15 percent, he said.

The two police bargaining units pay 6 percent, but both are in negotiations with the administration.

By having fewer employees this year than in 2008 and by switching from Anthem Blue Cross/Blue Shield to Medical Mutual of Ohio, the township’s health-care costs have decreased from about $2 million to about $1.7 million, Loree said.

Dr. Robert Zorn, Poland schools superintendent, said the district pays about $1.8 million in annual health-care costs. That will change Sept. 1 when all the schools in the county insurance consortium, which includes Poland, will change how spouses are covered.

The move shifts spouses of district employees off district plans if the spouses have access to benefits for less than $300 per month for single coverage where they work.

Richard Denamen, superintendent of the Mahoning County Educational Service Center, which runs the county health insurance consortium, said the consortium has encouraged employees to identify health problems early by offering $25 gas cards to employees who receive a routine mammogram or colonoscopy or complete an online health-risk assessment.

An expensive struggle

It’s more difficult for government bodies to force employees to take aggressive steps to improve their health — such as requiring an employee to submit to a health assessment — than it is for private industry because school employees are generally protected by union contracts, Denamen said.

Health-care costs are a major problem in the Youngstown City School District, Treasurer William Johnson says.

“Everyone’s struggling with it,” he said, suggesting that every politician in the country is working on the issue. It’s a cost factor that forces some people to delay their retirement plans, he said.

“We are in the upper range of what we provide,” he said, referring to the cost and extent of benefits the city school district provides for its employees.

The bill comes to about $10 million a year for a program that covers medical expenses, as well as prescription, dental and vision coverage. Youngstown administrators pick up 10 percent of their coverage cost while other employees pay 5 percent.

“It is a generous plan,” Johnson said, noting that the level of employee cost sharing isn’t as high as other school districts.

In July, the city of Youngstown will enter the fourth year of a base salary wage freeze for all employees. The city pays $7.2 million a year for health insurance coverage for about 750 employees covered by it.

Employees, except those in the secretarial and clerical union, pay 10 percent of their premium, about $780,000 a year. The secretarial and clerical union members pay 7 percent of their costs. That’s because the union is working without a contract.

Unions that signed contracts with the city in the past two years agreed to have their members increase their contributions from 7 percent to 10 percent. About five years ago, city workers contributed nothing toward their health insurance premium costs.

“We check for the best rates and shop around for the best prices,” said Kyle Miasek, the city’s deputy finance director. “Unfortunately, many of our employees are older so it drives up the cost. But the rates we have are competitive and fair.”

X Several Vindicator staff writers contributed to this report.