Study Shows Spike in State Employee Health Benefit Costs

New York (7/21/17) — 

State employees continue to be offered a wide range of medical plan choices, while their total costs and premiums are increasing despite ongoing efforts to mitigate and manage trend.

These are just a couple of key findings from Segal Consulting’s 2017 State Employee Health Benefits Study, which includes data from every state and the District of Columbia.

“Health benefits have become more important to state leaders as the cost of coverage outpaces overall inflation, placing budget pressure on health plan funding and underscoring the need for ongoing cost-management efforts,” said Andrew Sherman, Segal’s National Director of Public Sector Consulting. “Examining what other states offer can be helpful for these leaders when they make difficult decisions about potential changes in coverage.”

States continue to implement new high-deductible/consumer driven health plans (HDHP/CDHPs) coupled with Health Savings Accounts and Health Retirement Accounts, but there are stark geographic discrepancies to where it is offered. According to the study, 13 southern states offer HDHP/CDHPs, compared to just two in the northeast. They are offered in eight states in the Midwest and seven in the West.

“Those in the public sector that do not yet offer an HDHP/CDHP may find that their ability to recruit employees from the private sector hampered,” added Richard Ward, Segal’s Health Practice Leader for the public sector. “Some segments of the workforce may find the option challenging to afford. In order to meet that challenge a greater investment in participant health consumer educational programs might be required.”

Some other key findings from the study include:

  • States are, on average, requiring employees to share more of the premium cost.
  • The average total premiums for employee-only and family coverage in both preferred provider organization/point-of-service plans, which are offered by nearly every state, and HDHPs/CDHPs have risen by double digits over the past year.
  • Most state plans are designed to try and influence employees to use more cost-efficient drugs and less expensive delivery channels. The average copayment for specialty drugs are $101 at retail and $182 via mail order. 

For more information and data associated with this study, or to speak further with Mr. Sherman or Mr. Ward on how states are currently approaching these challenges, please contact Todd Kohlhepp.

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Segal Consulting (, a member of The Segal Group, is a leading independent firm of benefit, compensation and human resources consultants. Clients include public sector jurisdictions (state, local and federal), boards of trustees administering pension and health and welfare plans under the Taft-Hartley Act.

The Segal Group ( is a privately owned benefits, compensation and investment-consulting firm with more than 1,000 employees throughout the U.S. and Canada. Members of The Segal Group include: Segal Consulting, Sibson Consulting, Segal Select Insurance Services, Inc. and Segal Marco Advisors.

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