CA Taxpayers Paying Wildly Inflated Costs for Public Employees’ Health Plans

While private sector employers and workers are spending a bigger share of their income on their own health insurance plans, they don’t know they are also spending a bigger share of their income on public employees’ health plans.

“Spending 52 percent more than the market average for public employees’ medical insurance is costing California taxpayers at least $3.3 billion annually, according to a Transparent California analysis of 672,000 payroll records from more than 1,500 individual government agencies statewide,” Robert Feller with Transparent California said in a California Globe interview.

“The only reason I published this is because I looked back and they’ve always had these obscene plans,” Feller said. “The providers are exploiting the government.”

Feller said the most expensive plans were found within California’s special districts, which likely reflects the fact that personnel costs for these agencies are a comparatively smaller percentage of total expenses, which makes excessive spending less noticeable to ratepayers and the public. Special districts just aren’t on many taxpayers’ radar.

At more than triple the market average, the $29,923 average cost at the Central Contra Costa Sanitary District was the largest of any major government agency statewide, Transparent California found. Yet in July, Feller said Contra Costa has passed a 21 percent rate hike.

48 district employees received medical plans that cost at least $51,148 apiece. Plans that expensive almost certainly reflect price gouging, rather than additional value provided, as explained in more detail below.

Feller said some of the worst examples are:

• The $80,665 paid by the Water Replenishment District of Southern California on behalf of the agency’s communications director was the most expensive plan statewide.
• The Los Angeles Department of Water and Power had 151 employees who received medical plans that cost the district over $57,800 apiece.The agency-wide average of $20,935 means that ratepayers would save nearly $110 million annually if the district’s health costs were reduced to the market average.
• 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. Click here to see a list of special districts surveyed.
• 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

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

He noted that some cities were managing costs responsibly. “Cities like Ventura, Pomona, Newark, Hanford and several others are all behaving in a fiscally responsible manner when it comes to health costs,” Fellner said. “The city of San Diego and many area transit districts are likewise paying reasonable costs,” Fellner continued, “demonstrating that there is no legitimate need for other agencies to pay such inflated rates.”