Local Governments Cutting Health Coverage

October 22, 2012 (PLANSPONSOR.com) – Seven percent fewer local units of government provide health coverage to their active employees than in 2011, according to data from Cobalt Community Research.

Governments that do provide health coverage are paying a slightly smaller share of the premium. Fewer local governments are self-insuring. The percentage of governments whose employees receive insurance through their union jumped from 2% in 2011 to 13% in 2012.  

The research also found a drop in the percentage of local governments who provide health insurance for retired employees, down to 46% from 59% in 2011. The Midwest showed the largest drop, down from 68% to 50%. Nationally, those providing retiree health coverage are increasingly doing so through a coalition/pool, which increased from 12% to 26%. As in 2011, there was a slight decrease in the percentage of local governments that are fully or partially prefunding their retiree health liabilities.  

Local government respondents expressed improved confidence in their efforts to contain health costs. Such efforts include greater engagement with unions to reduce coverage, a modest move away from deductible increases and toward premium sharing, a strong wellness push and continued work to roll out health savings account (HSA)- and health reimbursement arrangement (HRA)-type programs. Many local governments are reopening health care plans to renegotiate lower costs with the carrier/administrator.  

More than 2,330 local units of government replied to the 2012 survey, the largest response since the study began five years ago. The results are by local government size, type, Census region and division.  

The report is available at www.cobaltcommunityresearch.org/health.