On Gov. Markell’s Logic about State Employees Health Care Premiums

Gov. Jack Markell's plan to slash compensation for state employees is now underway:

Nearly 43,000 state government workers and pensioners will see their health care premiums rise by 50 percent starting July 1 in the first step of Gov. Jack Markell's effort to control employee costs and balance the budget….

The increase in health care costs, along with some changes to the state's prescription program, are projected to save the state $22.5 million next year. The hikes were approved by the State Employee Benefits Committee, and do not need legislative approval.

The average state employee or pensioner not covered by Medicare now pays about $54 a month in medical premiums, state officials said, and the maximum for the most comprehensive family plan is $129 monthly. Medicare-eligible pensioners do not pay health care premiums, and that provision will not change.

Now for the predictable downward economic comparison:

The average monthly premium for employees nationwide is $280, according to state records and the Kaiser Family Foundation, which studies health care costs and issues. With the change, the average state employee in Delaware will pay $81 a month, and the maximum will be $193 -- still well below average.

Overall, state taxpayers will spend about $395 million next year for employees' and retirees' health care. For the most expensive state plan, the state pays $1,197 monthly per employee.

Downward is the appropriate standard according to Gov. Markell:

"What employees pay for health care is really a small fraction of what people on the outside pay,'' Markell said Friday. Markell said he realizes the increase might pose a hardship for lower-paid employees, but that with the state facing a projected $778 million revenue shortfall for next year, "we thought it was appropriate for them to pay an amount closer to the market rate.''

A $778 million revenue shortfall is an intractable reality, but what bothers me about Gov. Markell's logic is the implication that the average monthly premium for employees nationwide is an appropriate standard. When average, coupled with low wages, is too low, why justify increasing the health care premiums for state employees on a bad standard? Fairness does not equal average when average is inadequate. Fairness would be making average better.

It would be far more honest to simply say "We can't afford it" (assuming that is true) without appealing to an inadequate standard. Once average is set as the standard it will be difficult to decrease the health care premiums of state employees in the future.