Management & Labor

Budget Band-Aid

Increasingly, state and local governments are expecting their workers to pay a greater share of their own health care and prescription drug costs.
by | August 2007

Increasingly, state and local governments are expecting their workers to pay a greater share of their own health care and prescription drug costs.

In New Jersey, union workers for the first time will have to devote 1.5 percent of their salaries to health insurance. In New Hampshire, employees will now pay $25 per pay period for coverage, and copayments for visits to specialists will double to $20. In both cases, the reduction in benefits was offset by an increase in base salaries. In California, when California's pension board tried to impose a prescription drug copayment recently, union members successfully lobbied against it, although the board did raise premium and doctor visit costs for workers.

States and localities are putting these kinds of brakes on employee health care costs because they are rising much faster than salaries. In Wellesley, Massachusetts, city officials estimate that 20 percent of their tax revenues will be devoted to employee health costs by 2011. New accounting rules make future health costs more of a factor to worry about as well. "It's not only the impact on your current budget that's killing you," says Marc Waldman, Wellesley's treasurer. "It's the unreported liability that's also eating us alive."

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