COST OF STATE BENEFITS

As state government wrestles over the next 18 months with a revenue shortfall projected at $95 million, it’s time to consider the cost of state employee benefits.

As is the case in the private sector, the cost of providing health insurance benefits to state employees has grown in recent years. Yet state employees have not been asked to shoulder the burden of those increasing costs. Shifting a portion of the increases to employees, in the form of higher premiums and co-payments, could yield savings that ultimately allow the state to preserve jobs.

Currently, the state pays the entire cost of health, dental and life insurance premiums for its employees. Few would suggest that state government move away from providing health insurance to employees and their dependents. Collectively, Maine benefits with more of its residents having access to affordable health insurance, and therefore access to timely and preventive health care.

But in light of deep cuts made by Gov. John Baldacci through his recent curtailment order to programs that affect children, the poor, disabled and elderly, state workers paying higher co-payments for physician visits and prescriptions, and meeting higher deductibles, seems fair. According to the taxpayer advocacy group Alliance for Maine’s Future, the median state employee salary is $46,000, compared with $32,000 for those throughout Maine. The average cost of a state employee’s benefit package is $23,000, the alliance reports, compared with $6,400 for employees throughout Maine.

Compensation packages for 12,236 of the 13,428 state employees come through collective bargaining agreements. Negotiating those contracts with a goal of reducing a benefit that has been granted for decades is a monumental task. But it can be done – just ask paper mill workers about pay and benefit “give backs.” Some of those hard concessions preserved jobs and extended the economic viability of mills.

As a point of comparison, consider the city of Bangor’s health insurance benefits. Finance Director Debbie Cyr reports that the least expensive health insurance plan offered to single employees includes a $1,000 deductible, and prescription co-payment of $10, $25 or $40. Employees pay $29 weekly for the plan, with the city picking up $116 weekly, or 80 percent, of the cost of the insurance.

Yet another area for potential savings for the state could come in indexing health insurance premiums based on salary. Why should someone making $70,000 a year pay the same amount as someone making $35,000?

No one wants to see employee benefits reduced to the point of devastating a household budget. But generous benefit packages, once a way to encourage longevity and perhaps make up for pay rates that were less than those in the business world, are out of balance with the private sector and costing taxpayers.