Governor Deval Patrick's Budget Recommendation - House 2 Fiscal Year 2009

Governor's Budget Recommendation FY 2009

Health Benefit Contribution Reform

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Governor Patrick    FY09 House 2 Budget Recommendation:
    Issues in Brief

    Deval L. Patrick, Governor
    Timothy P. Murray, Lt. Governor



Governor Patrick's FY09 House 2 recommendation relies on the shared responsibility of government agencies, business, and citizens to build toward a new future for Massachusetts. Health care related costs are the largest and fastest growing component of the state budget, and as the Commonwealth seeks to invest not only in these important benefits, but also in education, the environment, and economic development, the issue of cost containment must be addressed at all levels of government, Governor Patrick's House 2 recommendation proposes changes in employee premiums from a system based on the date you were hired to a more rational system based on salary levels and affordability. This reform will improve both the fairness of the system and the Commonwealth's ability to continue this important benefit in the future.

According to the Kaiser Family Foundation and Health Research and Educational Trust 2007 Employer Health Benefits Survey, workers contribute on average 27% to their health coverage 1. In Massachusetts, state employees' contributions are tied to date of hire, with most employees hired before June 30, 2003 contributing 15% to their health coverage and employees hired after that date contributing 20%. This is a generous benefit that, during a time of fiscal restraint and shared responsibility, cannot be sustained.

Under Governor Patrick's proposal, state employees' contributions will instead be based on annual salary such that:

Salary LevelEmployee
less than $35,00015%
$35,000 to $50,00020%
more than $50,00025%

As the state continues its efforts to expand health coverage to nearly every resident in the Commonwealth, this proposal provides more affordable coverage to as many state employees as possible. Under the proposal, 6,000 employees earning less than $35,000 will see their premium contributions decrease, and 16,000 employees will not see a contribution change. For many other state employees, the amount of contribution will increase modestly based on salary and affordability.  These reforms generate more than $50 million in savings while aligning the Commonwealth with levels of employer-sponsored health benefits in other sectors of our economy, and better positioning the Commonwealth over time to be able to continue to provide comprehensive health insurance to state workers.

Compares the GIC maintenance budget without contribution reform, $807.84 million, to the H.2 recommended contribution reform total of $756.84 million.  The difference of $51 million is the proposed savings.

1 Kaiser Family Foundation and the Health Research and Educational Trust, 2007 Employer Health Benefits Survey

Prepared by the Executive Office for Administration and Finance • Rooms 373 & 272 • State House
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