Insurance Benefits

Health insurance coverage is provided to most full-time employees in both the public and private sector. According to the Bureau of Labor Statistics, 70 percent of private sector jobs nationally provide access to employer-sponsored health insurance benefits, and 73 percent of private sector employees participated in these health insurance plans when offered in 2012.[10] State and local governments tend to provide access to a greater extent, with employer-sponsored health insurance coverage offered for 87 percent of government jobs. About 84 percent of government employees nationally participate when offered these insurance benefits.[11]

While not available on a state-by-state basis,[12] the East North Central region (Michigan, Ohio, Indiana, Illinois and Wisconsin) has slightly higher access to these benefits in the private sector (72 percent) and slightly lower access in state and local governments (80 percent).[13]

In Michigan, there are some guidelines on the insurance benefits that state and local government officials can provide their employees, and benefits are subject to collective bargaining when employees are unionized. Outside of those stipulations, government employers are free to provide insurance benefits at their discretion.

State government employees — the 47,809 full-time equivalent employees[14] subject to the constitutional protections of the Civil Service Commission — have their insurance coverage determined through both executive action and collective bargaining. Although the CSC has primary responsibility for determining wages and benefits for public employees (subject to budgetary approval for increases in compensation),[15] it defers decisions about the specifics of insurance coverage to the collective bargaining process for unionized employee groups.[*]

State employees have a variety of options for medical plans, depending on their hire date and union affiliation.[16] Most plans require employees to pay between 10 percent and 20 percent of the insurance premium. The annual cost to the state government for medical insurance premiums per employee ranged from $3,637 for the least expensive single plan to $15,847 for the most expensive family plan in fiscal 2013.[17]

Some state employees, typically those covered by a different insurance plan (through a spouse’s employer, for example), elect not to receive medical insurance benefits. These employees receive a “rebate” of $1,300 annually and may still choose to enroll in the state’s “catastrophic health plan,” at no cost to themselves. This catastrophic plan cost the state $822 per employee annually in fiscal 2013.[18]

In fiscal year 2012, the state spent about $556 million in employer-paid medical insurance costs, or $11,637 per FTE employee.[†]

State employees are also offered dental, vision, long-term disability and life insurance coverage, which costs state government an additional $107 million for all workers who participate.[19]

Most of the 186,000 FTE school district employees also tend to receive generous health insurance benefits.[20] School districts, charter public schools and other government educational providers are able to offer benefits at their discretion, but are subject to collective bargaining when employees are unionized. New state mandates also require employer contributions to be capped or for employees to contribute at least 20 percent of the premium’s cost.[21]

According to a 2009 survey of Michigan conventional school districts, average teacher health insurance premiums for full-family plans were 39 percent more expensive than Michigan private sector averages and required employees to contribute less to their share of premiums.[22] In 2011, the most commonly purchased health insurance plan cost districts on average $7,210 for single coverage, $16,173 for two-person and $17,692 for full family.[23]

As with school districts, universities and local governments may offer insurance benefits at their discretion, subject to collective bargaining when employees are unionized.[‡] No survey or study to this author’s knowledge has been done to estimate the average health insurance costs for these government entities.

Compared to Michigan’s public sector employers, private sector employers in Michigan spend less on average providing health insurance benefits for their employees. According to the Kaiser Family Foundation, average full-family insurance premiums in Michigan costs $14,458 annually in 2011, with private sector employers covering $10,988, or 76 percent, of the cost.[24]

[*]  Seventy-one percent of the state’s civil service workforce is unionized. "Thirty-Third Annual Workforce Report: Fiscal Year 2011-12," (Michigan Civil Service Commission), 5-2, (accessed Sept. 18, 2013).

[†]  Note that this cost is different from the average medical insurance premium. This figure is the total employer costs of all the state’s insurance plans, including lower-cost single- and dual-coverage and catastrophic insurance plans, per FTE, including employees that may not be offered medical insurance benefits. Author’s calculations based on Michigan Civil Service Commission FOIA response for FY 2012 Certified Aggregate Payroll, email correspondence with James Hohman, Feb. 4, 2013.

[‡]  There are some limitations on the level of benefits offered to employees in Michigan’s local governments. For instance, MCL § 46.12a guides a county’s health insurance and pension provisions, and outside of some bounds (for instance, that circuit court stenographers be covered under retirement plans if offered) counties have fairly substantial latitude in crafting employment benefits packages.