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Share the cost of health care premiums

Post by Patrick O'Callahan on Sep. 30, 2009 at 7:41 pm with No Comments »
September 30, 2009 5:49 pm

This editorial will appear in tomorrow’s print edition.

It took the worst recession since the Great Depression to force the issue, but Pierce County may finally do the unthinkable: require workers to share the cost of their own health insurance.

County Executive Pat McCarthy’s 2010 spending plan is a brutal budget for brutal times. But one of the economies it proposes has long been routine in the rest of the world: splitting the cost of premiums with county employees.

Assuming it’s adopted, this would soften the sweeping budget cuts McCarthy is proposing by a cool $3 million.

It’s amazing that any group of employees is getting free coverage these days. Predictably, this group belongs to the public sector. Private employers, facing market discipline, can’t afford such munificence. The most generous private coverage is generally found within large companies – and they require that employees foot at least a quarter of the bill, on average.

Fully paid premiums break budgets in a couple ways.

Up front, they cost the employer a fortune. According to McCarthy, Pierce County spends an average of $1,000 a month on each worker’s health insurance. Dependents are included regardless of whether they qualify for some other insurance plan. Superior court judges have enjoyed double coverage, from both the county and state.

Pouring public money into health coverage on this scale compounds the costs. With the exception of the poor, people tend to consume doctor visits, scans, surgery and other procedures more than necessary if they share little of the cost.

The most authoritative study was done by Rand Corporation in the 1970s and early 1980s. It found, in general, that the less people paid for their treatment, the more treatment they bought – often treatment that made no difference to their health.

In other words, “free” coverage encourages waste. Waste drives up costs. Higher costs ripple out in all directions, driving up premiums and robbing money from other government priorities.

Fact of life: It’s remarkably easy to spend other people’s money.

In the case of Pierce County, the other people are ordinary taxpayers, many of modest income and skimpy health coverage. The county government should have moved toward cost-sharing years ago, as the state and other local governments have.

There’s something morally grotesque about taxing the less fortunate to finance rich and sometimes wasteful benefits for public employees.

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