Beat the Clock: Government Union ‘Cadillac’ Health Plans Preserved Before Tighter Controls Take Effect

Two days before a mandated 20 percent contribution for health insurance from all public employees would be imposed by the pending creation of a new state law, Muskegon County approved seven union contracts that require only a 15 percent employee contribution. According to research from the Kaiser Family Foundation, the average employee in Michigan with an employer-sponsored health insurance plan paid 22 percent of the cost for their own health insurance premiums in 2010, and the figure nationally was 27 percent.

Muskegon County Administrator Bonnie Hammersley said the total savings would have been the same under their deal as under Senate Bill 7 because employees also contribute 1 to 1.5 percent to retirement benefits.

James Hohman, assistant director of fiscal policy at the Mackinac Center, has estimated that if the spirit of Senate Bill 7 is implemented appropriately it could save taxpayers $1 billion per year.

According to news reports, very recently approved school contracts for employees in the Muskegon Mona Shores, Adrian-Madison and Spring Lake districts all beat the Sept. 15 deadline that would be imposed by Senate Bill 7. Those union contracts also allow employees to pay less than 20 percent toward their health care.

Senate Bill 7 would require that all government union contracts approved after Sept. 15 must have 20 percent cost sharing. Muskegon County and each of the aforementioned districts all approved their new union contracts before Sept. 15. Senate Bill 7 passed the Legislature this month and was presented to Gov. Rick Snyder for a decision on Sept. 13.

Article IV Section 33 of the Michigan Constitution gives the governor exactly 14 days to the minute to sign, veto or do nothing with a bill that is presented to him or her. If he or she does nothing with Senate Bill 7, then the Constitution stipulates that it “shall become law as if he had signed it.” The official Journal of the Senate states that Senate Bill 7 was presented to the governor on Sept. 13 at 2:24 p.m. This would appear to indicate that the clock should run out on the governor’s decision today, Sept. 27, at 2:24 p.m.

Why might municipal administrators make deals that call for a lower health care contributions from employees than what Senate Bill 7 would mandate?

“In their unseemly rush to lock in a deal giving county workers 'Cadillac' benefits far exceeding private-sector norms, just to beat the clock on a new law limiting such giveaways, commissioners appear to have put government union member interests ahead of those of taxpayers and voters,” said Jack McHugh, the Mackinac Center for Public Policy’s senior legislative analyst, in an email. “Residents may wonder, do these officials think government exists to serve the people, or do the people exist to serve the government (and its unions)?”

The beat-the-clock deals highlight the difference between government unions and private-sector unions when it comes to who sits on the other side of the bargaining table.

For example, the confrontational negotiations between the National Basketball Players Association and the league’s owners are threatening to cancel the regular season because neither side will budge from their stances. Yet instead of the owners taking a hard line to protect their pocketbook, imagine instead that the owners were rushing to pass a deal to give the NBA players more money days before a mandated ruling would automatically hand a better deal to the owners.

Why the difference?

“The NBA owners don’t have to be re-elected,” said Vincent Vernuccio, labor policy counsel for the Competitive Enterprise Institute.

Vernuccio said he has seen similar types of rushed union deals in Wisconsin and other states with impending cost-sharing mandates.

“The best deals for the unions are also the best deal for the politicians, who are in bed with the unions,” Vernuccio said. “The system we have now works great for the people in power and it works great for the unions. The unions have millions of dollars of forced-dues money to give to the politicians. … For the taxpayers and the citizens, that’s who has to foot the bill at the end of the day.”

Senate Bill 7 was introduced by Michigan Sen. Mark Jansen, R-Cutlerville.