Health Benefits Cost 40 Percent More for Government Workers than for Private Workers

I recently criticized an advocacy piece by an employers’ group, a report that promoted harmful, government-driven, solutions to price transparency in health care. This blog post will argue that private employers are not entirely ineffective.

The media never fails to give good coverage to the Kaiser Family Foundation’s Annual Employer Health Benefits Survey, which draws on “almost three thousand interviews with non-federal public and private firms.” The Survey reports a total premium for single coverage of $5,884 per employee, of which the worker paid $999 and the employer paid $4,885. (Economically speaking, the employee actually paid the entire cost, because the employer would otherwise have paid the balance as wages. However, our culture struggles to accept this fact, so we’ll let the figures stand as reported.)

The Kaiser Family Foundation divides its sample in different ways. It reports coverage by household size. It reports coverage by employer size. What it does not do is separate the public-sector benefits from the private-sector benefits. This is a shame, because the report is freely available and heavily reported.

A less-accessible report, published by United Benefit Advisors for its clients, tells a disturbing tale. Last year, public-sector health benefits cost $8,551 per employee, while private-sector coverage cost only $6,040.

That 40 percent premium for a public-sector worker is not captured by the Kaiser Family Foundation. Indeed, because the Foundation does not survey federal employees, it does not report those who might be the highest cost. Even if the latter include the military, the premium for government benefits is remarkably high.

When people complain about the cost of private coverage, they likely don’t know that many of the guilty parties are government employees (including the ones who would be involved in a so-called “single payer,” government monopoly, health system).

The reports do not publish the number of public-sector workers versus private-sector workers. If they did, simple arithmetic would likely show that the rapid increase in health spending over the decades is largely explained by growth in public-sector health benefits, not private-sector ones.