(This item originally appeared at http://www.mackinac.org/, the Web site of the Mackinac Center for Public Policy. The Mackinac Center sponsors Michigan Education Report.)
Summary: Public school teachers receive health insurance benefits that cost almost 40 percent more than the average Michigan family’s benefit package. Yet they pay significantly less — if anything — for those benefits. School districts must decide if they will continue to fund these generous benefits at the expense of educational programs and taxpayers. Main Text Word Count: 732
If the goal of
Michigan's public education system is to provide employees with outlandishly
expensive health insurance, our school districts are remarkably successful. But
if educating children is the mission — as it should be — some difficult decisions
need to be made. As tax revenues decline along with the state's economy and
population, schools must decide whether to cut programs or control health
insurance costs.
As demonstrated in the private sector, consumer-driven health care plans improve the overall health care market by putting employees in charge of more of their incurred costs.
The Mackinac
Center recently surveyed all 551 conventional school districts about their
employer-provided health insurance costs in 2008-2009. The results were
eye-opening. The cost of the average family plan for teachers was 39 percent
higher than the statewide average for the same type of plan. Teachers on
average contributed 4 percent to their own health care premiums, compared to
the state average contribution of 22 percent. In more than 300 school district
plans, teachers did not contribute anything to their own premium costs.
Michigan
taxpayers now spend $2 billion per year, or $1,250 per pupil, for school
employee health insurance. These costs have grown rapidly over the last decade.
Even though the number of full-time employees remained about the same,
inflation-adjusted total school health insurance costs rose by 44 percent from
2000 to 2008, according to the Center for Educational Performance and
Information.
Many factors
contribute to these rising costs and huge disparities. For starters, collective
bargaining rules weaken districts' ability to effectively deal with increased
insurance premiums. The most powerful union in the state — the Michigan
Education Association — has sold its members on the idea that they are
underpaid and deserve exceptional health benefits. Therefore, the union holds
out for the most generous health care packages. Not surprisingly, the most
generous plans come from the Michigan Education Special Services Association,
an MEA affiliate. About 88 percent of school districts buy MESSA plans for at
least some of their employees.
None of this is
news to policymakers and school finance experts. In fact, the Legislature in
2007 passed Public Act 106 mandating that districts seek at least four
competitive bids when they negotiate a new insurance plan. Unfortunately, the
bill has no punitive clause, and its vague language could hypothetically allow
one insurance company to provide the district with all four "competitive" bids.
The lack of
teeth in Public Act 106 and increased fiscal strains has the Legislature again
searching for solutions to this issue. House Speaker Andy Dillon, D-Redford
Township, made headlines last year by proposing that a state commission handle
public employee insurance, including teachers'. Supporters claim it would save
$900 million annually. Adding to the bureaucratic machine in Lansing is rarely
a net savings for taxpayers, but in this case, putting teachers on the same
plan as state employees could be better than the current system.
New proposals
that aim to curtail these costs are emerging in Lansing. One bill introduced
last month would require all public employers to disclose the types and costs
of their health insurance plans. Other bills would force public employees to
contribute a certain percentage — 15 or 20 percent — toward the cost of their
health insurance premiums.
These proposals
could certainly help, but only for the time being. If health care costs
continue to rise across the board, taxpayers will remain on the hook for those
higher costs. A better plan would be for the Legislature to find a solution
that not only reduces the burden on taxpayers today, but addresses the broader
issue of rising health care costs for the future.
As demonstrated
in the private sector, consumer-driven health care plans improve the overall
health care market by putting employees in charge of more of their incurred
costs. These plans would not reduce employee benefits, but would require more
employee initiative to find the best value for their health care dollars. If
all school employees were enrolled in consumer-driven health plans, such as a
high-deductible health savings account, Mackinac Center analysts estimate that
schools could save at least $450 million in just one year. Over the course of a
decade, those savings could grow to $26 billion. States like Indiana are
already reaping the benefits from moving public employees into HSAs, yet only
19 Michigan school districts have HSA plans for their teachers.
Economic
realities dictate substantive reform of school health insurance. The first two
steps toward fixing the problem — understanding the issue and identifying
solutions — are already complete. The next step is to make these solutions a
reality.
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Michael Van Beek is director of
education policy at the Mackinac Center for Public Policy, a research and
educational institute headquartered in Midland, Mich. Permission to
reprint in whole or in part is hereby granted, provided that the author and the
Center are properly cited.