The town of Corte Madera, CA, makes up for what it lacks in size and population, roughly 4 square miles with 9,425 residents, in its exorbitant government compensation packages. City government has approximately 43 full time employees with the average compensation package coming in at over $170,000.
That means every man, woman and child in Corte Madera pays $778.41 to fund just 43 positions.
A disproportionate number of these employees are firefighters. Amazingly, it’s routine for fire chiefs in California to earn well over $275,000 in total compensation. For instance, the fire chief in nearby San Rafael, population 57,713, earned $294,119.45 in 2012 total compensation, but it is quite surprising to see that such a small town employs three Battalion Chiefs with compensation packages around $294,000, $293,000, and $275,000. Then there’s the Director of Emergency Services who raked in over $313,000 in compensation in 2012.
This is just some of the information that is now available on TransparentCalifornia.com, a database of over 2 million public employee records that is searchable by name, job title and jurisdiction. Transparent California is provided by the California Public Policy Center as a public service and allows citizens to find out what public employees actual make, not what they or others claim they make.
Inflated compensation packages in Corte Madera don’t just come from high salaries, but from tens of thousands of dollars in benefits that are often hidden from the public eye. In Corte Madera, several city employees received health insurance policies that cost the government $20,894 a piece. This is hardly an isolated incident. In the Contra Costa Community College School District, over 150 employees are receiving medical plans that cost over $25,000 a year. The school district’s highest priced plans top out at over $29,000 a year!
This hurts taxpayers in two ways. The first is obvious — funding for $20,000+ premiums are ultimately paid for by taxpayers, some of whom don’t even have any healthcare of their own.
The second effect is more subtle, but well worth noting. The government’s systemic overpaying for health insurance, for a conservative estimate of well over 1 million California employees, results in raising the price of health insurance higher than it would have been otherwise.
As Dr. Thomas E. Woods documented in his book, Rollback, the artificially inflated cost of a good not only makes consumers, on the margin, less likely to purchase as much health-care coverage as they otherwise would have, but the less-price conscientious government purchaser acts like a de facto subsidy for insurance companies. This reduces the need for the producer to compete in normal market-based ways — improving the quality of the product offered and/or lowering the price. This means that the quality of health insurance that presently exists is of a lower quality than it would be without Corte Madera and many other government agencies purchasing $25,000 insurance plans.
This phenomenon is similar to how increasing the demand for higher education through federal aid and student loans has precipitated a dramatic increase in tuition over the last several decades.
Just as college tuition’s dramatic increase in price would grind to a screeching halt if consumers had to bear the full cost — by eliminating federal aid and government loans — the same principle applies to health insurance.
If government workers had to pay the full or partial cost of their health insurance or could choose between a $15,000 plan and $10,000 in additional salary or a $25,000 health plan, the demand for these high-priced plans would drop, thus putting downward pressure on the industry as a whole, This would create additional incentives for insurance companies to offer more competitively priced plans, and the price of health insurance would decrease for all as governments spent less on health insurance.
What Transparent California reveals is that taxpayers pay twice — initially by paying for the public employee’s compensation and again when they or their employer goes out to buy health insurance and find that the price has been artificially inflated.
Robert Fellner is a researcher at the Nevada Policy Research Institute (NPRI) and joined the Institute in December 2013. Robert is currently working on the largest privately funded state and local government payroll and pensions records project in California history, TransparentCalifornia, a joint venture of the California Public Policy Center and NPRI. Robert has lived in Las Vegas since 2005 when he moved to Nevada to become a professional poker player. Robert has had a remarkably successfully poker career including two top 10 World Series of Poker finishes. Additionally, his economic analysis on the minimum wage law won first place in a 2011 essay contest hosted by the George Mason University.