Passing health care costs to employees
reportposted on 06.08.2021, 16:21 by Darren LubotskyDarren Lubotsky
A study was published in The Journal of Health Economics provides striking data on ways that health care costs have been passed on to employees in the Illinois public school system in the 1990s and 2000s. The research also provides unique insight about the trade off employees make between health insurance and wages. This Research Spotlight provides an overview of the research.
IGPA Expert Darren Lubotsky and Craig A. Olson, a professor in the School of Labor and Employment Relations, examined 18 years of data from the Illinois State Board of Education census of school districts. Their research found that as health insurance costs have increased dramatically over this period, teachers have contributed more toward their health insurance premiums through payroll deductions.
Following a national trend, teacher salaries in Illinois have not grown much since the early 1990s (by only about 0.3 percent each year). At the same time, health insurance costs have risen by 89 percent, or about 3.8 percent per year for individual plans, and by 4.6 percent annually for family plans. The burden of this increase in costs was shared between teachers and school districts. Teachers’ take-home pay decreased because they face payroll deductions for their health insurance premiums.
“This research documents that premium contributions by employees are an important factor to consider when looking for cost-saving measures in public education,” Lubotsky said. “Because teachers contribute to paying for their premium, large shares of cost-savings will be passed on to teachers themselves, and will not necessarily translate to dollar-for-dollar savings for the districts and taxpayers.”