Private sector employees are paying more for their own healthcare expenses plus extra taxes to cover more than 24 percent of healthcare costs for their public sector counterparts, according to United Benefit Advisors' 2013 Health Plan Survey of more than 11,000 employers.
The study found public employer healthcare costs rose 22 percent this year, while private sector costs rose 15.8 percent. The private sector has controlled annual total healthcare costs better than public employers, largely by using consumer-driven health plans. In fact, enrollment in consumer-driven health plans rose from 16 percent in 2012 to 18 percent this year, according to a November survey of more than 2,800 employers with at least 10 employees.
But most public health plans continue to feature the generous benefits of yesteryear, putting local and state governments at risk for incurring "Cadillac tax" penalties in 2018 on plans costing more than $10,200 for individuals and $27,500 for families. Those benefits combined with rising medical costs drive up premiums, as efforts in 11 states try to bend the healthcare cost curve.
"Unfortunately, these penalties are passed on to taxpayers facing their own healthcare cost increases," United Benefit Advisors (UBA) CEO Thom Mangan said Wednesday in a statement.
The UBA study found private sector employees with dependents faced annual premium increases of 1.5 percent since last year, while public workers saw their annual dependent contributions dip by 3.05 percent. And cost sharing is higher in the private sector, the study noted. For example, the average private sector worker faces an in-network maximum that's $1,459 higher for a single adult and $2,226 higher for dependents.
To make matters worse on the private side, healthcare cost inequities coincide with wage disparities. "Despite the deficits they were running, various reports have shown that public sector pay has outpaced private in recent years, even during the recession. Recent public pay freezes have slowed salary growth. However, public employers have made up for income loss ... by paying even more for both employee and dependent healthcare coverage in comparison with the private sector," Manga said.
- here's the UBA study announcement
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