With Gov. Snyder expected to sign the bill, a new “Publicly Funded Health Insurance Contribution Act” will soon limit the amount that schools and local governments can spend on employee health insurance. This will help start to remedy the bloated employee benefit packages that for years have unbalanced local and school budgets. But from a taxpayer’s perspective, the new law still falls somewhat short.
Under the legislation (which passed the Senate with all but one Republican vote and the House with all but five), schools and local governments won’t be allowed to spend more than $15,000 per employee for a family medical insurance plan. To most people that sounds like a lot of money, and they’re right: It’s still 46 percent more than what the average employer in Michigan pays, according to data compiled by the Kaiser Family Foundation. The law will cap the coverage cost for single and two-person plans at $5,500 and $11,000, respectively, which also exceed private-sector averages by 46 and 41 percent, respectively.
Plus, government employers can actually blow past these caps and still comply with the new law, so long as their employees pay 20 percent of the premium. For example, according to documents obtained by the Mackinac Center from Port Huron Area Schools, that district expects to pay $21,439 next year for each teacher’s family plan premium. If teachers paid 20 percent of that premium, the district’s share would be $17,151, or 67 percent more than the statewide private-sector average. A better approach would have been to apply the cap and the employee contribution, rather than one or the other.
Still, this is progress, and hard-pressed taxpayers will take whatever relief they can get. But the Legislature should be prepared to answer this question: Why should government employers spend more on medical insurance on average than their private-sector counterparts stuck with paying the bills?
Worker’s Choice: Freeing Unions and Workers From Forced Representation
How Pensions Are Bankrupting Cities and States and How to Fix It
Study: $15-An-Hour Minimum Wage Would Kill 281,000 Michigan Jobs
Michigan and Ontario Governments Agree to Promote Crony Capitalism Together
Charter School-Prison Comparison Misses the Mark