How Does $10 a Month for Insurance Sound?

Cross-posted from State House Call.

By John LaPlante

In 1985, public school teachers and retirees in Alabama paid $10 a month for single-coverage health insurance. In 1986, the amount they paid went to … $2 a month, and it’s stayed there ever since.

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An outrage? Perhaps. It certainly has sheltered teachers from the realities of health insurance costs, which are by virtue of this arrangement largely obscured from their view. Over the years, state officials have tried to raise the employee payments, only to be overruled by the insurance plan’s governing board.

It’s all quite understandable, given the realities of the tax law. The secretary of the state’s teacher union said, “If the state has to pick up an additional $300 on health insurance for teachers vs. giving them $300 raises, it makes more sense to pick up the health care costs because that’s a benefit they don’t have to pay taxes on.” So now the State of Alabama, which once paid $39 a month per employee, is now paying $752.