Tough medicine: State worker health costs in the red again

Florida's next governor will confront an ongoing financial crunch: The continued rising costs associated with health insurance for thousands of state workers.

State economists this past month again projected that the trust fund used to cover the costs of health insurance will run a deficit over the next several years, growing from $62.2 million by June 30 of next year to $2 billion four years later.

The deficit is projected despite the decision by the Legislature to infuse $375 million into the trust fund during budget negotiations.

"Had it not been for the $375 cash infusion, the deficit in FY 2026-27 would have grown as well," the economists agreed.

The deficits are expected to grow each year despite a projected increase in the number of employees enrolling in the state group health insurance program, offsetting enrollment dips following COVID-19 and its workforce disruptions as well as decisions by people to not return to work.

Enrollment is expected to reach 196,719 in state FY 27-28 and slightly increase each year until it reaches 199,075 in FY 30-31.

But increases in revenue due to premium collections won't keep pace with projected costs of providing the coverage to state employees.

For instance, economists predict employees will pay $4.3 billion in premiums in state FY 27-28, but the costs are expected to reach $5.3 billion.

Not new

The state group health insurance program has been running deficits for years. The Legislature, though, has been reluctant to increase premiums employees pay for coverage.

Many career service state workers pay $50 a month for individual coverage and $180 for family coverage. Senior state employees as well as high-ranking agency officials and legislative staff pay lower premiums: $8.34 a month for individual coverage and $30 for families.

The decision to pump $375 million of cash for the coming budget year is part of a trend. Lawmakers allocated $275 million in FY 2025-26, $550 million in FY 2024-25 and $200 million in FY 23-24.

Florida TaxWatch issued a report in January 2025 recommending the Legislature align "employee premium contributions more closely with those of other large employers," a move it claimed would bring in an additional $446 million annually.

The report also suggests revising contribution rates based on actuarial benefit differences between existing health plans to promote financial equity and sustainability.