Michigan governor signs bill aimed at capping health care costs for local governments, schools

9/27/2011

LANSING -- Many local government and public school employees in Michigan will be required to pay more toward their health insurance under a new law signed by Gov. Rick Snyder.

The legislation, which covers medical benefit plans starting Jan. 1, limits the amount of money a public employer can pay toward workers' health coverage, likely saving taxpayer money but raising costs for some workers. The caps for employers range from $5,500 for a single employee to $15,000 for a family.

Local governments and schools could opt to pay no more than 80 percent of the annual cost of medical benefits instead of a hard cap. That would leave employees on the hook for at least 20 percent of their coverage costs.

Employers would have some flexibility for spreading out medical plan costs among employees based on income levels and other factors.

The Republican governor signed the legislation Saturday before leaving for a trade trip to Asia, the Snyder administration announced Tuesday.

Elected officials including state lawmakers are covered by the new law, but many state employees and public university workers won't be affected by the plan unless the state constitution also is changed.

"These changes result in a fair and equitable approach that brings public employee benefits more in line with the private sector," Snyder said in a statement. "Getting these currently unsustainable costs under control now helps ensure Michigan's long-term future and allows us to all move forward together."

The Snyder administration cited a 2009 survey from the U.S. Bureau of Labor Statistics saying that private sector employees in Michigan are responsible on average for more than 20 percent of their medical benefit costs. The Snyder administration said public employees cover an average of 10 percent to 15 percent, depending on whether the coverage is for individuals or families.

The Republican-led Legislature passed the final version of the legislation last month despite opposition from some public employee unions that consider the measure an attack on collective bargaining rights. Labor groups said the negotiation of health benefits should be left to the contract bargaining process.

If the law is inconsistent with the terms of an existing union contract, the law's requirements would not take effect until the contract expires, changes or is renewed. A local government could opt out of the plan in a given year with a two-thirds vote of its governing body.

The state's largest teachers union, the Michigan Education Association, has said "the real losers in the debate continue to be the employees who just got a greater burden of health care costs shifted onto their backs."