Health Costs Irk Public Employees

More than anything else, it was the generous health benefits that attracted Liz Carvin to government work back in 1984. Even as a janitor for the General Services Department in Sacramento, Carvin felt like a rich woman when it came to her medical coverage.

But in recent years, her health insurance contributions for herself and her family have been creeping higher. Co-payments for doctor’s office visits doubled this year to $10. Carvin’s share for prescription drugs tripled in some cases; it now costs her about $60 a month for asthma and diabetes medicine. And it’s going to get worse.

With CalPERS’ approval this week of a 25% increase in health premiums for next year, Carvin and many of the 1.2 million members of the California Public Employees’ Retirement System are facing out-of-pocket premium increases of as much as 66%.

Carvin, who takes home about $1,600 a month, is expecting her contributions to jump from about $70 a month this year to more than $100.

“I was shocked,” Carvin said. “You might not make that much, but the benefits, that’s why we got in it,” she said of government employment. “But now we’re just like everybody else.”

By most measures, CalPERS members, who include state and local government workers and retirees, still are better off than most when it comes to health insurance. For state employees in California, the government next year will pick up 85% or more of the total premium costs.

On average, private employers nationally contributed 76% of medical insurance premiums for individual coverage and 67% for families of employees, according to a survey last year by Mercer Human Resource Consulting. Mercer’s report also suggests that CalPERS members pay less for health insurance than most government workers in other states.

Blaine Bos, a principal at Mercer, said private and public employers typically have not been shifting a greater percentage of health premiums to workers in the last three years, largely because of the competitive labor market.

But with corporate profits still sluggish and signs that health-care costs will continue to spiral, analysts say employers could start to put more of the onus on workers, as CalPERS has.

In approving the 25% average jump in HMO premiums next year, CalPERS, the nation’s second-largest buyer of health insurance, warned that things could get worse the next year.

Most California state government workers have not received a pay raise in nearly two years, although their take-home pay rose by 2.5% this year because of pension deferrals.

By contract, state workers are slated to receive a 5% wage increase next year. But for some, that will be wiped out by higher medical costs.

“I’m going to have to find a way to lower my standard of living,” said Ralph Robles, who works for the Air Resources Board in Bakersfield.

“There is a strain, especially for the lower income and chronically ill,” said Steve Nakamura, president of Local 794 of the California State Employees Assn. He said that more than a third of the association’s members covered by CalPERS’ health plans earn less than $3,000 a month.

The strains already are apparent. A number of workers said they had reduced visits to doctors this year, after co-payments rose for office visits.

Some CalPERS retirees, to avoid office co-pays, have been going to hospital emergency rooms because there is no ER co-payment under CalPERS’ plans for retirees.

“It’s happening enough where it’s a problem,” said Kathleen McKenna, a spokeswoman for Kaiser Permanente, which is CalPERS’ biggest HMO with almost 400,000 enrollees.

Kaiser’s premium for CalPERS is rising 23% next year, an increase the HMO partly attributed to higher costs at its hospitals, including state-required seismic retrofitting. Most of the burden falls on state employees, whose rates will go up much more than those of retirees.

Employees who want Kaiser coverage for themselves and their families will contribute $86.95 a month, up from $52.44 this year. Family coverage at CalPERS’ other major HMO, Blue Shield, will cost an employee $108 a month, compared with $69 this year.

For Vickie Bordeaux, a single mother in Sacramento, that $39 would buy a pair of shoes for her teenage son or a Sunday afternoon at the movies with her family. Or pay the phone bill.

“It makes me mad. It’s a big, old chunk out of my paycheck,” said the 37-year-old clerk with California Community Colleges in Sacramento. Even when office co-pays were $5 last year, Bordeaux said, she spaced out her visits for back spasm therapy to save money.

“Now it’s already $10 to get into the door,” she said. “That makes me not go to the doctor.”