Recent legislation protects taxpayers from bearing the full burden of expensive government-employee health insurance premiums. The law includes cost caps, or a maximum taxpayer liability of 80 percent.
Under Proposal 2, collective bargaining agreements would likely supersede the so-called “80-20” law described earlier under Government-Employee Health Benefit Reform.” Overriding this law would cost taxpayers an estimated $1 billion annually in potential savings. This figure is based on the difference between public- and private-sector employment benefits, isolating just the health insurance portion and adjusting the gap downward to reflect the limited application of private-sector benchmarking. The 80-20 reform should save $1 billion annually when fully implemented and applicable to all local governments and authorities.[*]
[*] For the total difference between government- and private-employee benefits in Michigan, see Hohman, “Benchmarking Benefits Methodology Sheet,” (Mackinac Center for Public Policy, Dec. 17, 2010), http://goo.gl/QvJb1 (accessed Sept. 25, 2012).