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Hearings to be Held on Teacher Health Care Proposal
Gongwer News Service, July 14, 2005
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The state could save as much as $281 million, as much as $165 a pupil, if it were to adopt a centralized system for purchasing and providing health insurance for teachers, a report prepared for the Legislative Council concludes, but Senate Majority Leader Ken Sikkema (R-Wyoming) said no legislative action will be taken on the proposal until it has undergone a series of hearings.

But Mr. Sikkema and Senate Appropriations Committee Chair Sen. Shirley Johnson (R-Troy) praised the findings of the report that said a statewide pool of health insurance benefits for teachers would save anywhere from $146 million to $281 million for the state and local school districts, while potentially improving benefits for as many as 90 percent of the state's public school teachers.

And while some Democrats and officials of teacher organizations worried that the report was an attempt to get at the Michigan Education Special Services Administration, both Mr. Sikkema and Ms. Johnson firmly asserted during a press conference that the effort was not aimed at MESSA.

"MESSA is not the issue, it isn't for me," Mr. Sikkema said. "The issue is how do you provide top quality benefits to school employees." And how is that done when it cannot be denied that the cost of health benefits is putting pressure on local school budgets, Mr. Sikkema said.

Senate Minority Leader Bob Emerson (D-Flint) said if it can be shown that a pooling process can be shown to save money without harming benefits that had been negotiated then that should be explored. But, he said, he doubted such a proposal could work without cutting benefits, given the experience in some other states.

Mr. Emerson also complained that members of his staff were kept out of the press conference Mr. Sikkema and Ms. Johnson held on the report. To find out what was said he had to call a reporter who covered the function.

The first hearing is scheduled for 1 p.m. Wednesday, July 20, in the Senate Hearing Room in the Boji Tower in downtown Lansing, and at that session officials from Virginia-based Hay Group will outline their findings.

Ms. Johnson said she wanted at least three hearings on the plan before lawmakers begin to consider what action to take on the proposal.

MESSA and anyone else is welcome to react to the proposal and provide their own viewpoint, she and Mr. Sikkema said.

While critics have said the report was a smokescreen to move SB 55 and SB 56, which would create a statewide health insurance pool, Ms. Johnson said those bills are now dead. If a proposal does move forward, then new legislation would be created.

But Gary Fralick of MESSA questioned how lawmakers could say the bills are dead since the report's conclusions effectively support the premise of the two bills. "They could have saved the taxpayers the $285,000" the report cost, he said.

Asked if any proposal would be tied to the 2005-06 school aid budget, Mr. Sikkema said that would be difficult.

The study found that the average cost of health insurance for teachers in the state was $11,362 a year. Some 48 percent of all teachers have a fee for service insurance system - compared to 8 percent of all public employees - and for those workers the average cost of insurance is $12,349 annually.

In comparison, Mr. Sikkema said the average cost for state employees is $9,212 and for Senate members and employees, $8,893.

The study said if no changes are made to the plans that exist now, except that they are administered under one statewide system, then savings could be $146 million a year.

If the state offered a preferred provider plan along with fee for service plans and health maintenance organizations, then the savings could total $155 million a year, the report said.

The group recommended, however, the state offer no fee for service system, creating instead a PPO and several HMOs. The total savings would be $281 million, and the study said 73 percent of the state's teachers would see an improvement in benefits.

The report also recommended that the Michigan Public School Employees Retirement System administer the system.

Mr. Sikkema said the state would see savings through pooling of administrative functions, and teachers would see improvements through lower co-pays.

But Mr. Fralick said insurance savings come through the free market where different insurance plans can compete with each other at the bargaining table. The proposal in the report calls for a "big government" decision that takes power away from local officials.

Mr. Fralick also said under the current system the only way to save more money on health insurance is to cut benefits despite what the report said.

Liz Boyd, Governor Jennifer Granholm's spokesperson, said the administration had not yet had a chance to review the report and wanted to give it a thorough and objective review.

     

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