How health care costs are undermining America’s public-sector employers

Dauphin County, Pennsylvania, which includes Harrisburg and Hersheypark, shocked residents in December 2024 by raising property taxes 22%—the first increase in two decades—to help cover soaring employee health care costs. Over 20 years, the county cut its workforce by 19% but health care spending more than doubled, and per-employee costs tripled. Commissioner chairman Justin Douglas said the tax hike was unavoidable; for a median $100,000 home it added $150 per year, and officials had to do it again in December 2025 with another 10% increase.

The county's situation reflects a broader crisis. Public-sector employers are caught between raising taxes—which sparks public anger—and cutting benefits for unionized workers who trade higher salaries for richer benefits. Premiums are rising double digits in Arkansas, California, Colorado, Missouri, Nevada, and federal plans; New Jersey school workers face a 34% hike, Idaho's teacher health trust is broke, and Houston officials warn teachers about budget strain. Several public employers are also dropping GLP-1 weight-loss drug coverage.

The pressure has become 'untenable,' according to Douglas, and while inflation and federal funding cuts contribute, health care costs are a critical factor. With state and local governments employing about 1 in 7 U.S. workers, the consequences affect taxpayers and public employees alike, leaving public leaders with no easy solutions.