Monroe County: Rising health costs continuing problem for schools, county
3/30/2005TEMPERANCE - The skyrocketing costs of providing health-care coverage has come to dominate ongoing labor talks and quickly eat up more and more local tax dollars, said Monroe's county and education officials worried that the trend shows no sign of abating soon.
"It's issue number one for both sides," said Wes Berger, assistant superintendent for personnel at Bedford Public Schools, which has been locked in protracted labor talks with its teachers' union where health insurance costs have dominated the discussion. "In 1999, the cost for a family plan for one of our employees was $7,900 a year; next year, that cost will exceed $15,000."
The same problem surfaced last week for the Monroe County Board of Commissioners, who voted 5-3 to change the way insurance coverage was provided to non-union employees, the result of which was increased out-of-pocket costs for the employees.
"We've seen anywhere from 12 to 15 percent annual increases [in health care costs] in the last three or four years, and we expect 12 to 15 percent increases each of the next two years," county administrator Charlie Londo said.
"So far, we've managed to give employees raises even with the large increases in health care, but we're getting to the point now where we're digging into our reserves just to maintain [salary and benefits] at the level we're at."
Mr. Londo said the county spends an average of about $12,800 annually for each employee's family health care plan, and has seen its annual expenditures double over the last six years.
Unlike Bedford Public Schools, which participates in a statewide insurance plan, the county is ultimately self-insured, meaning it must repay 100 percent of health care costs incurred by those it covers.
It's an important distinction, Mr. Londo said, when county officials are looking at ways to cut their costs.
"When you start looking at restructuring health care [at our level], it's more of a cost shifting than cost reduction," the county administrator said.
"If you raise co-pays and other items, you're just switching whose pocket the money is coming out of."
Though last week's county commissioners' decision only affects non-unionized employees like department heads, it does have an impact on hourly workers as well.
The county is currently negotiating new contracts with eight of its employee unions, and will have another half-dozen to do over the next two years. Mr. Londo said he sees no health care savior on the horizon.
"It's just going to keep growing. The costs are going to continue to escalate unless something is done with the health care system in general.
"We have no control over what it costs for medical care out there; we just have to pay the bills when they come in," Mr. Londo said.
For his part, Mr. Berger said the situation in public education may actually be worse than in local government.
Gov. Jennifer Granholm has proposed the first increase in the state foundation grant - the primary source of operating funds for schools in Michigan - for the first time in three years.
But the $175 per-pupil increase, if it is passed by the legislature, won't do much to help financially struggling districts, Mr. Berger argued.
"Insurance and [required pension contribution increases] will likely eat up every cent of the new money from the state," Mr. Berger said.
"We're at a point now where the cost of providing health care to some bus drivers costs the district more than their salary. We need some assistance."