Local Government Employees and Retirees See Reduced Health Coverage

2012 National Study Shows Lower Coverage, Growing Optimism

LANSING, Mich.--(BUSINESS WIRE)--For many local governments, 2012 is an inflection point. New data show a brightening revenue outlook. But the cost of health insurance for employees and retirees is rising after a brief 2011 reprieve.

The report Health and OPEB Funding Strategies: 2012 National Survey of Local Governments explores how local units of government across the United States are working to make employee and retiree health care programs more sustainable. Now in its 5^th year, the report by the non-profit Cobalt Community Research is the largest and most comprehensive look at what local governments are doing to address health costs and what they plan to do.

The report shows 7% fewer local units of government provide health coverage to their active employees than in 2011. Governments who 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 report also shows 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 who are fully or partially prefunding their retiree health liabilities.

The 2012 Cobalt report marks an improvement in the confidence local government respondents express 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 HSA- and HRA-type programs (Health Savings Accounts and Health Reimbursement Arrangements). 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 level of response since the study began 5 years ago. The results are by local government size, type, Census region and division.

The study was coordinated by Cobalt Community Research, a leading nonprofit research coalition based in Lansing, Michigan. The study was made possible through the support of the following organizations: Cavanaugh Macdonald Consulting, the Employee Benefit Research Institute, the Government Finance Officers Association, Ice Miller, Public Consulting Group, the Municipal Employees’ Retirement System of Michigan and the National Conference on Public Employee Retirement Systems.

The report is available at no cost at www.cobaltcommunityresearch.org/health.

About Cobalt Community Research

Cobalt Community Research is a 501c3 nonprofit coalition with a mission to provide research and educational tools that help schools, local governments and other nonprofit member organizations thrive as changes emerge in the economic, demographic and social landscape. Cobalt provides citizen surveys, business engagement surveys, employee surveys, school surveys and other specialized research for governmental and membership organizations. Learn more at www.cobaltcommunityresearch.org.

Additional information on health funding, GASB 45 and local government response is available through the following organizations:

Cavanaugh Macdonald Consulting, LLC	678.388.1700	website: www.cavmacconsulting.com
Employee Benefit Research Institute	202.659.0670	website: www.ebri.org
Government Finance Officers Association	312.977.9700	website: www.gfoa.org
Ice Miller	317.236.2489	website: www.icemiller.com
Public Consulting Group	800.210.6113	website: www.publicconsultinggroup.com
Municipal Employees’ Retirement System of Michigan	800.767.6377	website: www.mersofmich.com
National Conference on Public Employee Retirement Systems	877.202.5706	website: www.ncpers.org