That's according to budget officials on Monday, who unveiled details of Otter's spending plan for fiscal year 2015, starting next July.
The insurance increases will cost the state $12 million.
That's equivalent to about 2 percent of total state worker pay.
Even so, Otter's budget chief, Jani Revier, said state employees will still see their own share of their health care costs increase for the coming year.
Given rising health care costs for the state, Revier said, "there just isn't enough money for pay raises."