Public Employee Health Coverage Dips as Local Governments Address Shortfalls

National Study Shows Local Officials are Tackling Health Costs

LANSING, Mich.--(BUSINESS WIRE)-- Half of the nations’ cities, counties and townships expect less revenue in 2011, and local leaders look to benefit costs to help address the shortfall, according to a new survey.

In the next two years, local officials plan to increase premium costs, increase deductibles and copays, improve wellness and renegotiate with insurance carriers. Many already have implemented these changes. Only 2 percent of respondents offering health care plan to eliminate coverage.

Now in its third year, The Health and OPEB Funding Strategies: 2010 National Survey of Local Governments report is based on responses from more than 1,900 city, county, township and special district governments across the country randomly polled this year.

“The report is unusual because it takes a detailed, scientific snapshot of benefit strategies at all levels of local governments – from large counties to small townships,” said William SaintAmour, executive director of Cobalt Community Research. “We’re seeing belt tightening and growing awareness of benefit costs at all levels, and the report gives us a detailed look at which design changes they’ve made and which changes they plan to make.”

According to the study, approximately 77 percent of the survey respondents provide health care to their employees, with 29 percent also providing health care to retirees. Larger local governments are more likely to provide such benefits.

Much of the report studies local government awareness and response to the Governmental Accounting Standards Board (GASB) Statement Number 45: Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions (OPEB). This statement creates a national standard for the measurement and disclosure of state and local government OPEB liabilities, especially in the area of health care for retirees. All state and local governments are expected to disclose information about their OPEB costs and liabilities in their annual financial reports for fiscal years beginning in 2009.

The report shows that local governments’ awareness of OPEB requirements rose from 81 percent in 2009 to 87 percent in 2010. About 74 percent have calculated or are in the process of calculating their liability to report it on annual financial reports, up from 62 percent in 2009. Only 30 percent are setting aside funds to pay for future costs, down from 40 percent in 2009.

The study was led by Cobalt Community Research, a leading nonprofit research organization based in Lansing, Michigan. It was funded by a coalition of organizations: Gabriel Roeder Smith & Company, the Government Finance Officers Association, the Employee Benefit Research Institute, the International Foundation of Employee Benefit Plans, the Municipal Employees’ Retirement System of Michigan, the National Conference on Public Employee Retirement Systems, and Tegrit Financial.

The report is available at no cost at www.cobaltcommunityresearch.org.

About Cobalt Community Research

Cobalt Community Research (www.cobaltcommunityresearch.org) is a 501c3 nonprofit organization with a mission to provide research and educational tools that help schools, local governments and other nonprofit member organizations thrive as changes emerge in the economic, demographic and social landscape.

Additional information on GASB 45 and local government response is available through the following organizations:

  • Gabriel Roeder Smith & Company, 800.521.0498, website: www.gabrielroeder.com
  • Government Finance Officers Association, 312.977.9700, website: www.gfoa.org
  • Employee Benefit Research Institute, 202.659.0670, website: www.ebri.org
  • International Foundation of Employee Benefit Plans, 888.334.3327, website: www.ifebp.org
  • Municipal Employees’ Retirement System of Michigan, 800.767.6377, website: www.mersofmich.com
  • National Conference on Public Employee Retirement Systems, 877.202.5706, website: www.ncpers.org



CONTACT:

Cobalt Community Research
William SaintAmour, Executive Director
877.888.0209
or
Gabriel Roeder Smith & Company
Paul Zorn, Director of Governmental Research
800.521.0498

KEYWORDS:   United States  North America  Michigan

INDUSTRY KEYWORDS:   Health  Public Policy/Government  Healthcare Reform  Other Government  Other Health  State/Local  Professional Services  Accounting  Insurance

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