The True Cost of Providing Domestic Partner Health Care Benefits

July 13, 2005

Helgeland v. Wisconsin - The True Cost of Providing DP Health Benefits

Opponents of fair compensation for state employees in committed same-sex relationships have claimed that the cost of providing domestic partner health benefits will be a significant impact on the state budget. This is simply untrue. In the two decades since companies and state and local governments have been providing domestic partner benefits, studies repeatedly have found that there is no significant increase in healthcare costs:

When the State of Minnesota provided domestic partnership health benefits to state employees, the Minnesota Department of Employee Relations reported that the increase in cost in 2002 was only $189,000 - out of a total health care budget of $331 million (or, an increase of only .05 percent in state employee health care costs). Julien Carter, Commissioner of the Department of Employee Relations, also reported that if the value of these benefits ""were redistributed to each state employee in the form of wages, they would represent approximately .002 cents per hour"" (or, 4 cents per year).

See April 16, 2002, letter from Julien Carter, Commissioner of Department of Employee Relations, to House Speaker Steven A. Sviggum.

The City of Madison, which has offered domestic partner health benefits for city employees since 1999, found that the increase in cost in providing reimbursement for health insurance for domestic partners was negligible - a less than one percent increase in the City's health care budget.

When the City of Milwaukee offered the benefits in 2002, far fewer than one percent of employees registered for the benefits. See ""Fourteen Milwaukee Workers Seek Partner Health Coverage,"" Milwaukee Journal Sentinel (Dec. 27, 2001).

In April 2004, a spokesperson for the Madison-based American Family Insurance Company reported that their healthcare costs increased less than one percent after they began offering domestic partner health benefits in 2002.

The State of Illinois will begin offering domestic partner benefits to state employees in 2006. The Illinois Department of Central Management Services has estimated that the cost of providing domestic partner benefits will be approximately one tenth of one percent of the state's employee health care budget. Read the report.

These experiences are consistent with studies across the country which have found that offering domestic partner benefits does not lead to a significant increase in cost.

A survey conducted by the Society for Human Resource Management revealed that 85 percent of companies that provide domestic partner benefits reported that their health care expenses remained about the same after offering these benefits. See Society for Human Resource Management, ""Domestic Partner Benefits Survey"" (1997). Read the report (subscription required).
As reported by the Employee Benefit Research Institute in March 2004, ""employers are no more at risk when adding domestic partners than when adding spouses. Experience has shown . . . the costs of domestic partner coverage to be lower than anticipated."" Domestic Partner Benefits: Facts and Background, EBRI (2004).
Karen Roberts, a senior vice president with AON Consulting, a benefits consulting firm, said in an article published in Business Insurance in 2003 that ""It's certainly a philosophical issue and not a financial issue. . . . Any employer who has based their reason for not offering [domestic partner benefits] on cost really has not done their homework."" See Judy Greenwald, ""More U.S. employers seen adding benefits for domestic partners,"" Business Insurance, Vol. 37, Issue 32 (Aug. 11, 2003).
A national study by KPMG Peat Marwick published in 1997 found that the costs of providing health insurance coverage for firms offering domestic partnership benefits was ""equivalent"" to the cost to firms not doing so. See ""Health Benefits in 1997: Survey of Employer-Sponsored Benefits,"" Montvale, NJ, KPMG Peat Marwick, 1997.
According to a 1997 study by the National Lesbian and Gay Journalists Association, companies that provided domestic partner health benefits to same-sex couples found that their overall health insurance costs increased by less than 0.5 percent. See ""Domestic Partner Benefits: A Trend Toward Fairness," National Lesbian and Gay Journalists Association, Washington, 1997.

Who else offers these benefits?

Eleven other states (Connecticut, Illinois, Iowa, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, Washington) and the District of Columbia offer these benefits, and they have not found the cost of doing so to be burdensome or prohibitive.
175 city, county and governmental agencies also offer domestic partner health benefits, including the City of Madison, Dane County, the City of Milwaukee, the La Crosse School District, Western Wisconsin Technical College, and other public employers in Wisconsin.
233 Fortune 500 companies now offer domestic partner health benefits.