Two new reports heighten the debates at the capitol and around city council and school board tables regarding pay and benefits levels for public employees in Michigan.
A new Citizens Research Council report suggests Michigan’s public sector is battered, but has weathered the state’s economic storm better than the private sector. Insights from the report:
And a new study by Lansing-based Public Policy Associates shoots big holes in House Speaker Andy Dillon’s proposed health care pool for all public employees in the state. Dillon suggest his proposal could save $900 million. PPA says no way. Specifically, the PPA study argues:
“Make no mistake,” PPA concludes. “‘Standardization of benefits’… is really a synonym for ‘reduced benefits.”
And , full benchmarking would require very detailed consideration of many variables, including deductibles, co-pays, coverages, waiting periods, coverage of pre-existing conditions, requirements for second opinions on selected services, and pricing forces between urban and rural areas, just to name a few.
Comparisons with other states wouldn’t take into consideration the “traditions and history” of each individual state, PPA writes. “No consideration has been given to the different expectations of insurance coverages formed by decades of experience.”
Of course, Michigan’s benefits history and expectations are largely driven by the 20th Century economic brawn and relative per capita wealth born out of Michigan’s great auto industry dominance. And those days are long gone, with private sector job loss and manufacturing union concessions so commonplace they barely make news anymore.
PPA notes that many local government and school districts have no doubt cut worker benefits in recent years and state government workers doubled their share of health care premiums in the last contract negotiations (from five percent to 10 percent).
Still, a fundamental question remains — and it’s a question most suitable to the legislative panel Dillon has appointed to study benefits pooling and related issues in coming months.
What level of and price of benefits is most fair to public employees in Michigan today?
In July, the Center for Michigan board asked that question and issued a letter urging serious consideration of Dillon’s pooling idea. At the time, board members recognized the vast complexity of a statewide pooling plan. Encouragement centered mainly around Dillon’s willingness to think outside the box and consider new ways of doing the public’s business during this extremely difficult period of transition for our state.
We’re repeating a question posed nearly three years ago by Gov. Jennifer Granholm’s bipartisan panel of budget experts, including two former governors, past government budget directors, and retired legislative leaders and state department heads…
“All public agencies must benchmark employees’ (including school employees’) pension, health care, and other benefits to the private sector. Some have benchmarked, but others have not. Spiraling costs are particularly acute for local government and school districts.”
In September, the Center for Michigan released a brief study suggesting that the per-enrollee benefits costs in numerous other states with large public sector insurance pools were considerably lower than per-enrollee costs for State of Michigan workers. Likewise, National Conference of State Legislatures data suggests Michigan state workers have, on average, more expensive benefits and lower premium shares than their peers across the country. From a taxpayer perspective, those are important considerations.
Regardless of the nuances of individual benefits plans, if the overall costs are higher elsewhere, taxpayers are within reason to ask why. As the Center board said in its letter in July, the concern is assuring public workers receive fair benefits at fair cost to the taxpayers.
Is much more information needed to fully benchmark and understand both costs and benefits levels in Michigan’s public sector? Absolutely.
But the widespread concern about, and examination of, public sector benefits costs is unlikely to go away anytime soon.
4 Comments
The focus on public employees still misses the mark on the continuing cost of FORMER employees. The continuing charge to active departments for retiree health for early retirees is choking effective government.
Michigan understands “legacy costs” in the auto industry but ignores it in state budgets.
Comparisons of health care (medical insurance) costs and benefits from state to state or private to public are invalid, and that’s just how the private insurance industry wants it.
Presently each individual state regulates insurance providers and each state is dominated by one or two very large organizations that are exempt from anti trust regulations.
Benchmarking is an activity that provides an observation and is totally dependent upon the observer’s perceptions and paradigms.
The drivers of cost inequity and cost escalation are not the recipients of the services.
A state by state or private/public/non profit perspective/analysis of health care is a questionable activity. The fox is still running the hen house and no on is paying attention.
One word we must remember: priorities. By cutting the overpay of state employees and re-organizing the pension system into something more affordable and managable, we could easily solve most of the budget crisis.
Then, we would have no cuts to critical mission services like law enforcement, education, and aid to the poor.
So, what should the priorities be: making well-off public “servants” richer, or taking care of critical needs?
Michigan needs to cut its spending starting with the school teachers and adminstration. 15% pay reduction and 35% benifts reduction,this might bring the pay package down to some believable range.