NPRI Researcher Cites Sierra Madre As Having the "Most Expensive Health Care Plan I Have To Seen To Date"

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(Mod: You would think Sierra Madre's Water Department has enough problems already. Bad tasting and oddly colored water, the potential for possibly deadly nitrification blooms later this summer, and a Moody's bond rating that persistently edges towards complete junk (link). This despite a huge water rate increase that continues to incrementally fall into place, with the next 18% installment of this hike now scheduled for July 1st. The author of the following article, Robert Fellner, has done an enormous amount of research on public employee compensation in California. In this excellent report on exploding government health care plan costs (link), he cites one city as leading all he rest.)

State and local government spending on health insurance grew by twice the national rate for 2012 - One of the more alarming data points I have come across while compiling the necessary records for the Transparent California website has been the large sums of money spent on health insurance for public employees. As our site groups together the cost of pension payouts and health insurance in order to present the information in a uniform and understandable manner, the cost of individual health plans was not something we were particularly focusing on.

However, in the course of formatting and uploading the necessary records to TransparentCalifornia.com, several agencies jumped out at me due to their alarmingly expensive health insurance plans. First, it was the $20k+ plans in Corte Madera, Calif. and the Contra CostaCommunity College District. Then I saw the $30k+ plans in Beverly Hills. Finally, I came across what remains the most expensive plan I have seen to date — a $37,815 health insurance plan for the Water Superintendent of Sierra Madre, California (link).

I suspected this was not a problem isolated to the handful of agencies whose numbers happened to catch my attention but, rather, indicative of a systemic problem likely to be found in many other public agencies. This sets up a situation where taxpayers are effectively taxed twice for these plans — initially, to fund the public employee’s compensation itself and, again, when they find themselves paying an artificially inflated premium for their own health insurance.

Pew Research confirms these suspicions. In 2012, state and local government spending on health care increased by 8 percent; double the amount total U.S. healthcare spending grew during that same time period. The larger trend is terrifying — state and local government spending on health insurance premiums has increased an inflation-adjusted 444% from 1987 to 2012. The agencies above are merely symptoms of a much larger problem.

The farther the distance between consumer and provider, the less reason either has to economize, which is a factor in the out-of-control prices we see nationwide in the health-care sector. When a government is willing to spend $37,815 of your money on one health plan, what financial incentive does an insurance company or anyone in the medical system have to work on lowering prices?

While there are a plethora of factors responsible for the current health-care crisis in this country, the third-party-payer system, especially when that third party is using other people’s money, like a government agency does, is one of the core issues that demands immediate attention.

(Mod: Given the kinds of problems we have been seeing with our Water Department, some questions do come up. Here's one: exactly what have they done to deserve some of the most expensive health care plans in the entire State of California? Here is another: was a reason for the water rate hike currently underway the absurd amount of money being spent on health care plans? Below is a portion of the Pew Research article cited in the NPRI report.)

Pew Research: State, Local Government Spending on Health Care Grew Faster Than National Rate in 2012 - Total U.S. health care spending grew slowly in 2012, rising about 4 percent, but the story for state and local governments was dramatically different. Health care spending by states and localities increased 8 percent, according to the latest data from the Centers for Medicare and Medicaid Services, consuming a larger share of revenue—about $3 of every $10—than has been the case for such expenses since at least 1987, the earliest year for which complete data are available.

As state and local governments continue to navigate the aftermath of the Great Recession, health care spending remains a main source of fiscal pressure.

(Mod: And to think that, in California at least, Sierra Madre is the very worst offender. For the rest of this Pew Research report click here.)

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