Sunday, May 21, 2017

May 20, 2017 Legislative Update

House members were called in on scattered days for brief spurts of action on the floor over the past two weeks before adjournment, mostly waiting for news that there was actually a budget to be voted on. The rank-and-file were never really privy to the efforts to resolve the teacher’s health insurance negotiation issue, but were on stand-by for whether Education Fund language would, or would not, be added to a bill.
There was so much focus on the $26 million that might be saved in the Education Fund that there was no attention at all to the actual budget. By the time we were hearing the conference committee report at about 11:30 p.m. Thursday, no one asked any questions.
Even I, who has acquired a reputation for being someone who actually reads every bill, did not rise to ask for clarifications on some of the “squishy” numbers that are part of the annual budget-balancing game. We were already two weeks past the targeted adjournment; people were anxious to have it come to an end, and I feared my head being bitten off.
It’s not as if we ever actually build an entire budget. Government lurches forward at an annual cost of (this current year) $5.75 billion, and we battle over the nickels and dimes (or less) that represent the changes from the prior year. In fact, the entire difference in negotiating between the House and Senate version of next year’s $5.82 billion budget was $14.5 million, settled with a reduction of $4.9 million. Literally pennies, within the overall scope.
But it is part of a much big picture of how we juggle money in the budget, not because a specific nickel here or nickel there impacts the budget on its own, but because, as they say, “after a while it adds up to real money.”
So it is with the teacher’s health insurance debate.
The potential $26 million in savings isn’t actually an amount to be worth the level of the fight over it, compared to the size of the Education Fund as a whole. But it is about a trajectory of spending, and about a principle: if there is a sound way to save real money, do we ignore it? Or do we recognize that every penny matters, and pursue it?
One of the “detail” issues on the teacher insurance question – and there are many, beneath the short sound bites -- is how it can be that we have new health plans that save $26 million, yet assure that the recipients get the same coverage than they do now. (Can I buy that plan, please?)
That’s a question I haven’t heard discussed very much, so here’s the basic explanation:
It goes back to the Affordable Care Act, and what was often referred to as the “Cadillac Tax.” When I first found out what that was, I actually though it was one of the few brilliant pieces of the ACA. What it recognized was the well-researched fact that one significant component of our high health care costs in the U.S. is over-utilization: we get care that we don’t need. And if enough of your health care is fully covered by insurance, you are more likely to over-utilize care. It is human nature. We feel we paid for it, so we have a right to use it.
So the ACA put an upper limit on what it called the “actuarial values” – the percentage of the average person’s costs that a plan covers – at 90 percent. Plans at higher values get a heavy tax placed on them, to discourage them. The current teacher’s plans run at about 96 percent.
The “grandfathering” for old Cadillac-level plans is now over, and teachers will be moving to plans that cover less, at a much lower premium price. (That is a fait accompli that has nothing to do with the controversy over who does the negotiating.)  This is a once-only moment in time for this changeover.
The total savings for the new plans across the state will be about $75 million, on an ongoing basis.
If all stays at status quo, each school board will have to figure out how to negotiate what happens to those savings within each district. Increased salaries to offset lower health insurance value? Reduce the local budget (which ends up helping the statewide Ed Fund, perhaps more than the local property taxpayer)? There are many options.
The proposal developed by the School Board Association and then endorsed by the Governor was to take $49 million of the $75 and put it back into teacher’s health care in the form of health savings accounts. That amount gives teachers the same as current levels of coverage, or even slightly better – in terms of co-pays, and so forth – but the education system as a whole saves the remaining $26 million.
How could that be, that $49 million buys a $75 million equivalence in coverage?
That’s the difference, on a very large scale, in the actual utilization rates when the payment is coming from a health savings account (where you keep the leftovers) versus an insurance company pocket.
But none of the numbers compute very well if they are being broken into different plan packages with different percentages of cost-sharing, district-by-district. If left individually negotiated, the odds aren’t good that the optimal savings will occur; they certainly won’t occur evenly across the state; and the savings might be invested in many ways other than reducing property taxes.
The School Boards and Superintendent’s proposal was to move the collective bargaining (move it, not end it) from local districts (local school boards) to a statewide contract, for health insurance purposes only. Other benefits would remain locally negotiated, but there would be a single health care plan that would be equitable across the state.
The need to do it on a statewide basis is where the “everyone wins” fell apart, with the teacher’s union taking the position that negotiating at the state level was taking away collective bargaining rights, because the state is not the direct employer. Collective bargaining, they are saying, is destroyed if it is not a direct employer-employee relationship, regardless of who is paying the bills. (As we are all painfully aware, the creation of a statewide Education Fund turned us into taxpayer-employers acting through the state, instead of acting locally, in collecting the money and paying the bills.)
Herein lies the irony of that position: I’ve been in the legislature long enough to have seen two different initiatives – both successful – to have the state pass a law to allow a union to form, among a group of workers, for the purpose of bargaining with the state-as-funder rather than with their actual employers.
Take the example of child care workers, employed by local daycare centers that receive a significant amount of funding through state subsidies for children attending the centers. They lobbied for and won the right to form a union for collective bargaining with the state for establishing the subsidy rates.
So I can’t buy the concept that having health care negotiated on a state-level basis is hurting the integrity of collective bargaining. We are the employers (represented by our school boards), but we are already, virtually speaking, state-level employers –far more so than the state role with day care workers.
The bottom line is that this is a “draw-a-line-in-the-sand” power struggle between a governor who wants to set a direction about affordability and maximizing savings for taxpayers, versus a union that wants to demonstrate its ability to control legislators votes, and exploiting its own members in the process.
I am opting to stand behind the governor. We’ll find out where it all ends sometime after the veto override vote on June 21.
Thank you for the honor of representing you. Please contact me with your questions and your opinions. You can reach me by message at home at 485-6431 or at this email at

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