Open enrollment for dummies

October is open enrollment period for public sector workers in San Francisco — a hair-ripping, garment-rending season of crashing websites, contradictory instructions, and widespread questioning of life choices for public servants in our city. With its dead-end links and eye-blurring charts, it’s hard to escape the impression that open enrollment is just one giant shell game.

But that’s not all.

Now that we’re hearing SFUSD’s financial catastrophe might not actually be as vast as we’ve been told, my mind turns to an analysis of the obscene and punishing health care penalties educators in this city are still being asked to pay. And while we’re at it, I think we should take this moment to sharpen our focus on the epically stupid game of Russian roulette San Francisco keeps playing with our teacher workforce, to say nothing of the irrationality of our whole city’s approach to health care costs.

Join me in wading into the epically stupid reindeer games we keep playing with our city workers’ health care costs.

Let’s start by demystifying these costs and comparing apples to apples. 

There’s a key difference in the paycheck structure of school employees and other city and county employees. Teachers and other educators are paid once a month over 11 months, while city and county employees are paid biweekly. That’s right. Educators are not technically year-round employees. 

These differing pay structures make it harder to compare costs, fees, and expenses. But hey, I’ve taught middle school math — you can’t scare me with a messed-up model. Let’s strip this monster down to its skeleton and have a rational conversation.

Rather than trying to map differing payroll deductions against each other, let’s reframe our comparisons in terms of annual cost-sharing. Then we can ask the data a more reasonable question: what percentage of an employee’s total annual health care premiums is each employee being asked to shoulder?

This approach will enable us to determine whether city employees are being pitted against each other through wildly differing cost-sharing models. 

Let’s begin at the beginning. 

Premium structure

Employers and the insurance industry conceptualize the cost-sharing model using three levels of premiums. 

These three levels correspond to structural stages of the basic human life cycle: (1) insurance for the employee only (“E-only”); (2) insurance for the employee plus their first dependent “E + 1”); and (3) insurance for the employee, their first dependent, and any subsequent dependents (“E +2”).

Let’s simplify our thought experiment and limit our analysis here to the basic Kaiser plan — the one for which our public employers always pay the largest share of premiums and employees always pay the smallest share.

And as long as we’re focusing on sense-making here, let’s also agree to use estimates so we can ballpark our numbers. This will let us build the basic model, and then any of you nerds out there who need greater precision can dig into the weeds to your heart’s content.

Basic Kaiser premium costs: city and county employees

The total premiums for the basic Kaiser plan are fairly consistent across San Francisco public employers, so let’s estimate these as follows:

E-only: around $11,000 total premium costs for the year

E + 1: around $22,000 total premium costs for the year

E + 2: around $32,000 total premium costs for the year

Let’s look at the largest group of the 37,000 city and county employees and their cost-sharing model. These employees each pay around 7 percent of the total E-only premium; when they add a dependent, they pay 7 percent of the E + 1 premium; and as they add another dependent, they pay around 17 percent of the E + 2 premium. 

This progression of cost-sharing across the three levels looks like this:  7 percent → 7 percent → 17 percent. 

Now let’s look at the actual cost-sharing breakdown.

For the E-only plan, this worker’s total premium costs for one year will be around 7 percent of the $11,000 total premium cost, or around $800. That amount is divided across 26 biweekly paychecks, totaling $31.32 times 26 for a grand one-year total of $814.32, which matches our estimates. Simultaneously, the city will contribute $416.20 each pay period, totaling $10,821, which is roughly 93 percent of that employee’s total health care premiums.

Things get more expensive once you have that first kid. 

If you’re a typical city and county of San Francisco employee, there’s good news! Your share of the next level of premium costs remains approximately 7 percent, although it’s now 7 percent of $22,000, rather than of $11,000. But the city is still paying 93 percent of your premium costs. Keep your chins up, public employees!

With a second child comes the obligations of the E + 2 level, which will boost your cost-sharing percentage to 17 percent. That means you’ll pay $5,575 per year while the city pays the other $27,221, which is still 83 percent. 

In dollars, our sample city employee’s cost-sharing progression looks like $800 → $1,600 →$5,575 for their family’s Kaiser premiums, which is still a pretty good deal. 

But it looks a whole lot better once you start contrasting it with the cost-sharing mode being imposed on educators in SFUSD.

That cost-sharing model might best be described by a trained economist as (checks notes) a raging dumpster fire. 

Basic Kaiser premium costs: SFUSD educators

While city and county employees see their progression grow like this: 7 percent → 7 percent → 17 percent, SFUSD educators’ progression of cost-sharing from E-only to E + 1 to E + 2 looks like this:  3 percent → 35 percent → 48 percent. 

Wait … what?

That’s right, friends. 

SFUSD educators go from paying 3 percent of their $11,000 annual premium (or roughly $330 a year) at the E-only level to paying a whopping 35 percent of their $22,000 premium at E + 1, to an eye-popping 48 percent (yep, almost half) of their $32,000 premium at E + 2.

That’s a cost-sharing progression of $330 → $7,700 → $15,840 for healthcare premiums just under the basic Kaiser plan.

Does this make sense to anybody?

Then again, I might be confused about how all of this is supposed to work. Remind me again whether firefighters and structural engineers pay for their own work supplies.

Why are teachers being forced to pay half their annual health care premiums while other city workers pay no more than 17 percent for the same thing? Can you understand why experienced teachers who’ve just had their first child quit for greener pastures as soon as they see their exploding E + 1 payroll deduction?

I’ll wait.

But there’s more …

I haven’t even touched on the fact that there are whole classes of city employees whose cost-sharing progression runs like 0 percent → 0 percent → 0 percent. As we like to say in math papers, it is left as an exercise for the reader to figure out who in the city is paying $0 for their full-family health care premiums.

My point here is not to point fingers. My point is that we probably could find a better way to leverage our purchasing power to benefit public servants. It seems awfully crazy to pit us all against each other to squabble over scraps. 

There are approximately 37,000 city and county of San Francisco employees and 10,000 SFUSD employees. Surely we have greater leverage together, right? Surely there must be a better and fairer way to negotiate heath care costs and cost-sharing for this many city workers, right?

Don’t we all have better things to focus on?