The Rising Cost of Teachers' Health Care

February 19, 2013

The cost of providing teachers' health care in the United States has risen substantially when compared to private-sector employees. These increased costs have been the focal point of contentious debates in Wisconsin, Ohio and Massachusetts over collective bargaining on public-sector benefits, say Robert Costrell, professor of education reform and economics, and Jeffery Dean, distinguished doctoral fellow, at the University of Arkansas.

  • According to Bureau of Labor Statistic (BLS) data, 97 percent of K-12 teachers nationally work full time with an average employer insurance cost of $8,559.
  • Only 83 percent of private-sector professionals worked full time in 2012 with an average insurance cost of $6,803.
  • Eighty-seven percent of K-12 teachers participate in health insurance plans through their employer compared with 80 percent of private-sector employees.
  • For single coverage, employer costs for private-sector employees are 82 percent of those for teachers ($4,496 vs. $5,494), but for family coverage, private-sector professionals are 104 percent of those for districts.

Further dissecting the BLS National Compensation Survey (NCS), Costrell and Dean indicate that for single coverage, teachers pay a smaller share than private professionals (13 percent vs. 19 percent), but for family coverage, teachers contribute more to cover the costs of their plan (34 percent vs. 29 percent).

  • The NCS data shows that union workers are more likely to participate in medical plans through their employer than nonunion workers and that the employer cost is higher for union workers than for nonunion workers.
  • In Wisconsin, which curbed collective bargaining in the public sector, costs have fallen 13 percent to 19 percent, with estimated savings of $2,614 for family coverage and $1,304 for single coverage.
  • Fringe benefits, like retirement contributions, Social Security and life insurance, decreased from 51 percent to 43 percent of teachers' salaries after the collective bargaining changes.

Costrell and Dean suggest that in order to enhance efficiency and lower costs, greater competition for health insurance, higher contributions and increased out-of-pocket expenses might be necessary. They also recommend returning back to more salary-based compensation and increasing the variety of health plans offered to teachers.

Source: Robert Costrell and Jeffery Dean, "The Rising Cost of Teachers' Health Care," Education Next, Spring 2013.

 

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