April 14, 2003

ROMNEY CALLS FOR REFORMING STATE EMPLOYEE HEALTH CARE

Recommends bringing employee premium share in line with the private sector

To bring state employee health care costs in line with the private sector, Governor Mitt Romney today called on the Legislature to approve his plan to increase the contribution state employees make toward their health insurance costs.

From Fiscal Year 1991 to Fiscal Year 2002, the cost of providing health care coverage for state employees has grown by 78 percent, from $487 million to $867 million. Over that same period, enrollment has only gone up four percent.

“While we all appreciate the dedication of our public work force, we can no longer expect the taxpayers to pay for health care benefits for state employees that are more generous than what they receive in the private sector,” said Romney.

Taxpayers currently contribute 85 percent toward state worker health care costs, leaving the employee to pick up the remaining 15 percent. Romney’s plan – outlined in his Fiscal 2004 budget proposal – will increase the share state workers are required to contribute to 25 percent of the least costly plan offered.

Romney highlighted what some private companies require their employees to pay. At Fleet Boston Financial and PricewaterhouseCoopers, employees pay 30 percent of their health care premiums. Tweeter Home Entertainment Group employees pay 34 percent. M.I.T. employees pay 50 percent.

Stephen J. Adams, President and CEO of the Pioneer Institute, a Massachusetts public policy think tank, praised the Governor’s initiative.

“This proposal is a simple, fair and necessary step in balancing the state’s budget and is a test of the Legislature’s commitment to balancing the state budget without a major tax increase,” said Adams.

The Governor’s spending plan for Fiscal Year 2004 calls for $718.6 million for the Group Insurance Commission, which administers the health insurance program for state employees. If the Legislature does not address the pressing issue of growing health care costs for state workers, the agency will need at least an additional $62 million to meet its responsibilities.

Currently, employees have no incentive to select a cost-effective plan, and more often choose the top-of-the-line option, which results in escalating health care costs year after year.

Under Romney’s plan, a sliding subsidy scale will be introduced with employees who choose the least expensive health care plan paying a lower percentage of their premium. If an employee chooses a pricier plan, the state will pay less with the worker making up the difference. Romney’s proposal sets a minimum state contribution of 75 percent of the most cost-effective plan available to all employees.

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