MichiganVotes: Bill Would Increase Portion of Public Employee Health Care Cap

Legislation has been introduced in the state Senate that would increase the amount school districts and local governments can spend on employee health insurance benefits for couples with no children. 

Senate Bill 323, sponsored by Sen. Bruce Caswell, R-Hillsdale, would amend the 80/20 and hard cap law that was passed in 2011. That law requires school district and local government employees to pay at least 20 percent of the cost of their health care benefits, or alternatively, caps the employer’s aggregate costs through a formula that adds up the amount spent on coverage for individual, individual-plus-spouse, and family plans.

If enacted, Senate Bill 323 would increase the maximum individual-with-spouse benefits cost in this formula from $11,000 to $13,445 (22 percent), meaning public employees could pay no health care premium up to that amount. According to the Kaiser Family Foundation, the average person in Michigan paid $2,212 for a similar plan.

“It makes the amount couples pay each month the same as two single employees pay, to make it consistent across the board,” Sen. Caswell said. “That's really what this is about. Currently couples pay much more.”

Would that increase the amount that school districts pay for those in the “individual-plus-spouse” category?

“Yes, they would have to pay the additional $2,445,” Sen. Caswell said.

While the costs resulting from the change are expected to be minor, or even negligible, no one seems to be able to put a price tag on it. According to the Senate Fiscal Agency, which will be preparing an analysis of the bill, there isn't enough data from the local entities involved to make an assessment. That means that the legislative analysis of Senate Bill 323 isn't likely to include a cost estimate.

Michael Van Beek, director of Education Policy for the Mackinac Center for Public Policy, said the legislation could add to costs for some school districts, but in many cases it wouldn't.

“It is very difficult to determine the financial impact of this,” Van Beek said. “There are so many variables involved. The category, 'individual-with-spouse,' is the one with the least amount of employees. In addition, districts that have complied with the 80/20 method would not be affected by this change. Also, this would not affect districts with specific dollar amounts written into their contracts until those contracts expire.

“However, one thing to remember is that these caps are still significantly above what the average taxpayer has in the private sector,” Van Beek said.

Under the 2011 law, these are the amounts school districts pay, before the employee starts paying:

• Single person coverage, $5,500
• Employees with individual and spouse, $11,000.
• Employees with family coverage, $15,000

If Senate Bill 323 were enacted, the following change would take place.

• Single person coverage $5,500
• Employees with individual and spouse $13,445
• Employees with family coverage, $15,000

One of the co-sponsors of the bill is Sen. Mark Jansen, R-Grand Rapids, who was the sponsor of the 80/20 hard cap legislation two years ago. According to information supplied by Sen. Jansen's office, the 2011 legislation didn't take into account how those in the “individual-with-spouse” category would be affected.

Other Republican cosponsors of Senate Bill 323 are: Senators Mike Nofs, R-Battle Creek; Geoff Hansen, R- Hart; Jim Marleau, R-Lake Orion,; and John Pappageorge, R-Troy.

Senate Bill 323 has been referred to the Senate Reforms, Restructuring and Reinventing Committee, which is chaired by Sen. Jansen.

(Editor's note: Every Saturday, Michigan Capitol Confidential brings you a story about a bill being discussed in committee or presented in the Legislature for a vote. For more information, go to www.MichiganVotes.org.)