Peter Luke’s article “Employee health costs a linchpin for broader Michigan change”, July 19, 2009 http://blog.mlive.com/peterluke/2009/07/the_marker_that_speaker_andy.html, focuses on Michigan House of Representatives Speaker Andy
“Dillon's proposal to pull all government employees in Michigan under one health insurance benefit program, and to couple it with a tax overhaul, poses a direct challenge to risk-averse Democrats and Republicans who find it politically safer to defend the respective interests of the status quo.
A single health insurance standard for some 400,000 teachers, emergency responders, caseworkers and engineers save significant sums over time because it assumes employees would shoulder a greater share of their health benefits cost. A 15-percent assessment on a $12,000 policy for a government worker with dependents works out to $1,800 annually.”
Dillon’s announcement picks up the thrust of numerous previous Republican efforts to bring Michigan public employee health benefit costs under control. Coming from a Democrat, especially the Democrat Speaker of the House, controlled by a majority of Democrats, this gives the idea a better chance of being enacted than before. That’s a good thing. The bad thing is that this is still just an idea, with the details to be worked out.
The details will not be simple. Take the situation with public schools. Many public school districts are facing not only single year budget deficits, but chronic multi-year deficits resulting in negative “general fund balances”. Even those districts without budget deficits feel pressed by the current funding situation in Michigan. But the pressures amongst districts are not being felt equally.
Many districts under financial pressures for years have already taken significant steps towards controlling their employees’ health care costs. Some districts have gone from the earlier MESSA SuperCare 1 (a truly Cadillac plan) to MESSA Choices, then Choices 2 (comparable to BCBSM Flexible Blue). Drug co-pays have gone from $2/$2 to $10/$20 (co-pays for generic drugs/brand name drugs). Some districts have negotiated insurance premium “caps” paid by employers, shifting the cost of the premiums in excess of the maximums paid by the employer to the employees. Some districts have adopted high Deductible Plans and Health Savings Accounts, attempting to induce more informed consumerism into health care service purchases to reduce the long-term costs of health care. Other districts have gone to self-insured plans, purchasing a major medical plan to cover the big losses and self-insuring for the deductibles under those high deductible plans – usually for the employees not represented by the Michigan Education Association, the owner of MESSA.
Thus, any savings generated by a new statewide plan will affect different school districts differently. If the state were to simply impose upon school districts a new, lower cost plan, some districts might actually see a cost increase, rather than a cost decrease, while other districts that have not previously negotiated cost savings measure may save money. It would probably turn out that districts which have been most pressed financially in the past are those who have already made these changes and not realize the savings. Hmm, that does not seem to solve their problem.
Nonetheless, to the extent that savings throughout the system may be achieved, Michigan needs to consider new ways of doing business. Michigan is highly likely to lag the nation in economic recovery, so it may be awhile before we are singing, “Happy days are here again…” We must seize upon opportunities to be more frugal, despite the entrenched special interest groups that will oppose changes.