Pension costs aren’t the only public-sector employee benefits that are out of control. A new report by Josh Barro with the Manhattan Institute, “Cadillac Coverage: The High Cost of Public Employee Health Benefits,” contends that public-sector health care costs are outpacing private-sector costs increases, too. This chart tells the story:
The obvious question is, “Why?” Barro gives four reasons: “(1) Public employees contribute only 15% of the cost of their premiums, versus 25% for private-sector employees; (2) public-employee plans offer more generous benefits, including lower co-pays and deductibles; (3) governments require shorter enrollment waiting periods for new employees; and (4) public employees opt in for employer-provided coverage at a higher rate: 84% versus 74% for the private sector.”
Unfortunately, Barro’s report does not provide a state-by-state breakdown, so we can’t see if the national pattern holds true in Virginia. But the report does highlight one area in which the McDonnell administration might find more cost savings in the state budget. Is anyone looking into this? If so, please let me know.