Benefits September 29, 2009

Governments Consider Cost Sharing to Hold Down OPEB Costs

September 29, 2009 (PLANSPONSOR.com) - New standards of reporting for state and local governments' other post-employment benefits (OPEB) have local governments considering ways to lower costs.
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A study by Cobalt Community Research the most common cost containment strategies being considered by local governments are:

  • Increasing health insurance deductibles and copays;
  • Increasing the employees’ share of premium costs;
  • Implementing wellness programs;
  • Expanding use of generic drugs;
  • Implementing health savings accounts (HSAs) and health reimbursement arrangements (HRAs);
  • Negotiating lower costs with current carriers; and
  • Educating employees/retirees to make better health care decisions.

According to a press release, few respondents plan to eliminate benefits. Approximately 78% of the survey respondents provide health care to their employees, and 30% also provide health care to retirees.

Only 27% of respondents have already increased deductibles over the past two years; only 19% implemented wellness programs; and only 15% expanded the use of generic drugs.

Of the local governments that provide retiree health care, 80% indicated they are aware of the GASB 45 reporting requirements. About 62% said they have already calculated the liability or the calculation is in process.

For governments who calculated their OPEB liability, 40% plan to fully or partially prefund the liability, while about 52% plan to continue a pay-as-you-go approach.

The study report is available for purchase at www.cobaltcommunityresearch.org/health .

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