Administering Health Plan Burdens During Economic Downturns: Lessons From Local Governments and the Great Recession

Abstract

The Great Recession exacerbated health care spending as a share of total revenue for local governments through the combination of decreased revenues and increased health plan premiums. This event forced the hand of local governments to choose between making layoffs, cutting services, or reducing employee benefits. Understanding more about why and how they did so is imperative for improving how local governments structure benefits during times of economic stability or surplus and also how they react during future economic downturns. In this study, a national survey of city and county administrators (N = 822) was conducted to understand if and how local governments introduced health plan burdens to their employees in response to the Great Recession. While a majority of local governments did not introduce significant health plan burdens to their employees, when a burden was introduced it was distributed disproportionately to current and future employees while protecting retired employees.