Virtually all full-time state government workers are eligible to participate in employer-provided health plans and are given access to the same health plan in retirement. The rising cost of health care has rapidly increased the total expense to public sector employers of providing health insurance. These costs have also risen as a proportion of payroll and as a percentage of state budgets. Moreover, state governments are facing staggering levels of unfunded actuarially accrued liabilities associated with the provision of retiree health insurance. This issue brief provides a detailed analysis of the health plans in three large states, California, North Carolina, and Ohio. In addition to documenting the rising costs, this brief reviews recent changes in plans and policy options to help contain expenditures on health insurance.