Tackling the High Cost of Health Care for Michigan's Public School Teachers

It's no secret that Michigan is hurting financially. Gov. Rick Snyder recently proposed a controversial budget in light of the dire fiscal situation in an attempt to lower costs and rein in the state's growing deficit. While the governor and Michigan's legislatures are taking some issues head-on, the cost of health care for the state's public school teachers is an area that should be addressed. Health care for public school teachers costs the state $2.6 billion annually, a number that is bloated by health insurance plans that cost up to 40 percent more than those of Michigan's non-teachers.

Additionally, Michigan's teachers contribute very little, if anything at all, to their health care packages. Snyder has gone so far as to propose that school districts may get a bonus if the district's teachers and other employees of the school contribute at least 20 percent of the cost of their own health care premiums.

There are potential solutions, and some have already proved effective. For example, the Grand Ledge Public School District has had a policy for 30 years that its teachers contribute 46.5 percent of the cost of health care premiums. As a result, the district has set a cap on the amount it will pay for health care and also is willing to shop around and accept some benefit cuts to keep the rate down. This is in stark contrast to other school districts that pay for 100 percent of their teachers' premiums and, at the same time, offer top-of-the-line insurance plans to their teachers.

State legislatures have attempted to force districts to shop around in the past, but their efforts have been largely ineffective. In 2007, Michigan's legislature passed Public Act 106, which mandated that districts obtain at least four bids before picking a particular health care plan. However, there is no penalty if a district fails to do so and, based on the way the law was written, it's possible to get four bids all from the same insurance company.

House Speaker Andy Dillon, a Democrat from Redford, has been pushing a plan to consolidate all government employees, including public school teachers, into one central plan so the state could negotiate and manage health insurance for the entire group. The plan would save an estimated $900 million annually.

Other proposals in the works are requiring public school teachers to disclose the costs of their health insurance, in attempt to increase public pressure, and simply passing legislation that requires public school teachers to contribute a certain percentage of their premiums.

As it is now, public school teachers and their unions have less incentive than those in the private sector to find ways to decrease their health insurance costs, whether the cost cutting entails shopping around for cheaper policies or accepting less coverage or higher deductibles for a lower premium. Any plan that puts pressure on the teachers and their unions to take the initiative to lower the cost of their health coverage will save the state millions.