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Fair share

 

The relentless rise of health insurance costs is a reality known to all, but the impact is not felt by everyone. In New York, most local government and public school employees contribute little-or nothing at all-to the cost of their health care benefits.

What if this changed? A new report from the Nelson A. Rockefeller Institute of Government answers that question.

Its conclusion: Requiring local government and school district employees to pay on a par with state employees would save more than $1 billion a year immediately and nearly $1.8 billion within five years.

The report, prepared as part of Lt. Gov. Richard Ravitch’s effort to develop proposals to fix New York’s structural budget imbalance, shows that state employees and retirees contribute an average 18 percent of health insurance costs. But in most municipalities and many school districts, "the employee contribution is none to minimal."

Indeed, the report notes that almost half of school employees statewide-including those in the Rochester City School District-make no contribution toward their health insurance. Neither do local government employees in four of the five largest counties outside New York City. In the fifth, Monroe County, the share borne by employees and retirees is less than half the state employee average.

The Rockefeller Center report proposes two alternative remedies: One would require all public employees to make contributions at least equal to those already required for state employees and retirees enrolled in the New York State Health Insurance Plan. The second would require all public employers to join NYSHIP and adopt the contribution rates in effect for state employees and retirees.

The first option allows more flexibility at the local level; the second would produce greater cost savings while also addressing the problem of a lack of transparency in local government employee and retiree benefits.

Importantly, either approach would produce more than $1 billion in annual savings without affecting current retirees or cutting services.

Yes, there is a third option: change nothing. But can we afford it?

11/12/10 (c) 2010 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail rbj@rbj.net.
 

One comment

  1. Laura Weller-Brophy

    Tax payers in New York State can no longer afford to support the disparity in health care insurance contribution rates by local government and education workers. New York State tax payers face ballooning State deficits, stagnating salaries, relatively high unemployment, and record-shattering tax rates. The demand for NYS tax payers to carry the entire cost of health care insurance for local government employees simply does not pass the “red face” test no way to close the budget deficit by carrying such programs forward. It would appear far more fair for employees to enjoy a comparable level of contribution rate whether government employees or private sector employees. It may be best to to allow the government employee contribution rate to vary, according to the average rate found in the public sector. There is no apparent reason why government and education workers should have a lower contribution rate.

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