‘Wildly inflated’: California wastes billions on overpriced health insurance

(Image: pixabay)

Not only are California taxpayers shelling out over $3 billion every year to cover health insurance for government workers, but those benefits cost 50 percent more than the average.

The inflated cost of the health benefits for California public employees was found in a new analysis conducted of local and state government agencies by Transparent California.

The study of 672,000 payroll records spanning over 1,500 of California’s city, county and state offices found that an average of $14,288 was spent on medical insurance per employee, an amount exceeding the regional average of $9,381 by 52 percent.

Even more eyebrow-raising were the amounts being paid for employees at California’s special districts, including one example at the Central Contra Costa Sanitary District where the $29,923 average cost was more than triple the market average.

But the most expensive plan in the entire state went to the communications director for the Water Replenishment District of Southern California. That agency’s public servant was generously covered with a plan costing $80,665.

(Image: WRD.org)

The Los Angeles Department of Water and Power had 153 workers who enjoyed health plans costing $57,816 each. This same agency, which was raided by the FBI in July, had over 300 employees who earned more than $100,000 in overtime last year. One principal security officer actually racked up $313,865 in overtime for which the DWP had no details or explanation, according to the Los Angeles Daily News.

“Spending over $50,000 on a single employee’s health insurance plan is an inexcusable waste of taxpayer funds,” Transparent California Executive Director Robert Fellner said.

Many of the government agencies do not even require the employee to pay anything toward the plans.

“Medical plans this expensive simply don’t exist in the broader market, which is a strong indication that providers are exploiting the fact that these governments are happy to pay inflated prices with other people’s money,” he added.

Health benefits for the general manager at Riverside County’s Rubidoux Community Services District totaled $55,717 while health plans cost more than $36,000 each for government employees in Anaheim.

“LA Metro ($21,757) and the San Francisco Bay Area Rapid Transit District ($19,449) would have saved $63.5 million and $33.5 million, respectively, by paying the market rate,” the Transparent California analysis found. “The cities of Whittier ($23,918), Milpitas ($21,543), Alameda ($21,150), Richmond ($19,588), Santa Cruz ($19,255) and Oakland ($19,133) all had average health costs of more than twice the market average.”

“The annual premiums of over $50,000 found at agencies like Central San and the LADWP are such extreme outliers that price gouging, rather than a genuine increase in value provided, is the only explanation that makes sense,” Fellner said.

“Employees at both the LADWP and Central San do not bear any of the cost of these wildly expensive medical plans,” Fellner added. “This makes it easier for providers to artificially inflate costs, as consumers are obviously much less cost conscious when someone else is paying the bill.”

A recent survey from the Kaiser Family Foundation indicated that 92 percent of family medical plans cost less than $26,000 while the U.S. Bureau of Labor Statistics found that an average of $5,291 is spent for a single worker’s medical coverage by private employers.

The Water Replenishment District of Southern California had average health care costs that were triple the national average, providing $29,207 per worker at the special district which only has 46 employees.

“These agencies should do what every employer would do when costs get embarrassingly high — spend the time to shop around and get the best price,” Fellner said. “And, because the public sector has a weakened incentive to control costs, the employee has to have some skin in the game.”


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Frieda Powers


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