Magazine article Nation's Cities Weekly

Without Cap, Administration Says Health Care Could Run Cities $20 Billion Extra

Magazine article Nation's Cities Weekly

Without Cap, Administration Says Health Care Could Run Cities $20 Billion Extra

Article excerpt

Municipal employers will not be given cost protection for health care premiums under the Clinton health care reform proposal due to be introduced this week.

While business have been assured they will pay no more than an amount equal to 7.9 percent of total payroll for health care premiums, that same protective cap will not apply to government employers. Further, there are no plans to address this issue, wihch could amount to a colossal mandate on cities and towns.

By the administration's own projections, this additional mandate could cost local governments $20 billion above and beyond the 7.9 percent level--a burden the administration felt the federal government could not afford to carry.

The health reform proposal will require employers to pay 80 percent of the cost of the regionally determined health premium for their employees and dependents. In order to protect employers from disproportionate costs the plan guarantees employers--except state and local government employers--that their costs for this mandatory premium cost will never exceed an amount equal to 7.9 percent of the employer's payroll.

Administration spokespersons have revealed that the primary reason for not. treating municipal employers the same as all other employers with regard to the cap, is that protecting state and local governments with the cap could cost the federal government $20 billion over five years. Rough estimates produced by the American Federation of State, County and Municipal Employees (AFSCME) indicate that the annual costs of not being protected by the cap could range from $1 billion to $7. …

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