By John Bebow - October 4, 2007
In the budget deal, legislators took important steps to begin to get a handle on the ever-growing costs of public sector pension and health care costs. Those costs are devouring the budgets of state and local governments and schools.
The new insurance pooling rules passed over the weekend may save money, but then again may not. Tightened access to retiree health care will eventually save hundreds of millions of dollars -- but that reform doesn't save anything for the next ten years.
Legislators face the wrath of the MEA teachers union for these incremental steps. Those benefits reform votes over the weekend were as acrimonious as the tax votes. But scrutiny of public employee benefits is only going to increase, whether public employees like it or not, in part because of trend of tightened coverage in the private sector.
Some four in ten U.S. companies plan this year to increase employee premiums, co-pays and deductible levels for employees, BusinessWeek noted this month. No doubt, many Michigan governments and schools are cutting back, too. And taxpayers are likely to demand more.
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I have heard and read comments like this both form the federal and local Governments.
The Bennies Quandary
By John Bebow - October 4, 2007
"In the budget deal, legislators took important steps to begin to get a handle on the ever-growing costs of public sector pension and health care costs."
Jobs are fewer and fewer, and those of us with jobs that pay benefits, find those benefits, more and more expensive and with less and less coverage, and little or no pensions in our future.
Is there anybody out here that know what the cost is to see that our government workers and they're families are provided with top health plans (for the rest of their lives) and great pensions plans?? truly, is there?
We the people, including those living below the poverty level, are forced to fit this into out budget. Do we get to review these policies, and maybe withdraw our funds when we find ourselves in financial difficulties?
Linda:
I'm a small business owner myself, but I take a little different view on the public sector.
In my business, any employee can make an almost unlimited amount of money. Come up with the right idea, help us land a new account, etc...and your pay will go up dramatically. (We also offer pretty good health care, and match 401K). Too many small business owners, I feel, are using "rising health care" to put more money in their own pockets. I just saw where part of the compensation for the CEO of one company was $3,000 for a physical. Hmm....good for the CEO, but not good for the employee?
You are a high school senior looking for a career. You can become a math major in college, and go to an insurance company and earn a six figure income as an actuary (and maybe have so-so benefits and a matched 401k) or take a job as a school teacher (with the curriculum changes, we need more upper level high school math teachers). You will earn $30,000 to start. If you go back to college and get a masters, after 10 years you might be a $55,000. But you will never earn six figures. So we compensate the loss of income for this individual with a better health care and pension package than he would earn in a more lucrative private sector job.
There are tradeoffs everywhere. In Michigan today, we are fifth lowest in the nation in the number of state and local employees/10,000 residents. That's pretty efficient. We've outsourced tons of the menial jobs. A pretty good percentage of those left are college grads.
Do we want to have only those too stupid to get a job anywhere else working in government jobs? Or do we want people who choose public service knowing they will be compensated in some fashion?
Not saying you are wrong, but just saying the knee jerk "those state employees need their benfits cuts" could have some unintended consequences. Can anybody spell FEMA? If you cut government to the point where only those too incompetent to find jobs elsewhere are in it, you can't be suprprised when it fails to do its job.
Bennies ain't.
The tax exempt compensation packages offered to many in this State, referred to as health insurance, are just that; part of the compensation used to attract and retain qualified employees. They are not a benefit!
The cost of health care is outside the sphere of influence of most who receive this tax exempt compensation. The cost is in the control of those that benefited from the tax exempt status - the health care industry. You may find that the special interests that lobbied so long ago for that tax exempt status are the same who now cannot - or will not - control their costs.
There is a way to reduce the cost of providing medical services to Michigan's citizens that is within the power of the legislature, the public and the service providers. It is worth about $100,000,000 annually and is currently being done in other parts of the world.
Require that all medical service providers within the state digitize all patient records within two years. Eliminate the paper records systems (each medical discipline has its own preferred form and structure for keeping records - very inefficient and ineffective)that cost so much and significantly reduce the quality of care received.
You can also require all phamacies in the State to display the drug price list created by Michigan' Attorney General. That action puts the purchaing decsion deeper into the patients sphere of influence.
Finally, require Shewhart Control Chart disciplines be applied to the digitized records created by the first suggestion. This will provide data over time for procedures and allow the honest assessment of what is working and what is not working. Hopefully the medical practitioners in the state, and their accountants, will see that application of the profound (and simple) knowledge provided by Dr. Shewhart (in statistics) is the most effective way to increase profitability while increasing quality and decreasing cost.
Until those deeply invested in health care shatter their paradigms we will all continue to play the game of "WhackaMole."
I understand that the Michigan Legislature has health insurance benefits FOR LIFE. Does anyone know where to find out this information? What is the value of this benefit? $500K? The Michigan Legislature has one of the highest annual salaries in the country. I had to call Lansing to find out what we pay them. I understand that when David Bonior retired he has over a $2,000,000 pension, and of course, health insurance for life. Is public service sector becoming some aristocracy. It's about time to stop this bull. The government employees are receiving MORE pay, pay increases and benefits then the PRIVATE SECTOR, and we are not attracting the MOST QUALIFIED as a result. We are all living on less, so I guess the Michigan Legislature says, "let them eat cake."
David,
Actuaries don't earn six figure salaries as a starting wage either. According to the most recent salary survey by the Department of Labor, teachers earn more than architects, economists, as well as most other professions.
And I'll bet all my dollars and half my donuts that when they were students, people from both of those professions did better in school than the average teacher.
You make a good point that reducing compensation below the true market level will have negative consequences, but I have yet to see a unionized workforce anywhere that is paid below market levels.
If you tell me that a plan to reduce benefits is not going to save any money for ten years, I will bet the other half of my donuts that it will NEVER save money.
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David Waymire quoted a statistic that Michigan is the fifth lowest in the nation in the number of state and local employees/10,000 residents. I have another statistic on a more local level. Detroit has one city employee for every 48 residents. Indianapolis gets by with one city worker for every 203 residents. City employees take up a large percentage of any city's budget, which means taxpayers foot the bill. While I certainly do not begrudge a city workers salary, after all they have families to support also, having too many city employees hurt the city residents. Among large cities in 2003, Detroit had the eighth highest tax burden for families of four making $50,000 a year. Detroit's jobless rate in 2005 was 14%, more than double the national level. The poverty rate is the worst of any big city in the U.S., with one-third living below the line.
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