News Story

Beware Legislators Posturing on 20 Percent Co-pay Proposal

Last week a Senate committee advanced a bill that would require employees in public schools and local governments to pay at least 20 percent of their health insurance fringe benefit premiums. The measure contains a huge loophole, however, and the potential exists for it to be amended in a way that guarantees it will die in the House.

The proposal is contained in Senate Bill 7, which would amend state statute, and in Senate Joint Resolution C, which would amend the constitution. The loophole is a provision allowing the governing board of a local government to waive the co-pay requirement with a two-thirds vote. Given the power of government employee unions in municipal elections, it’s very possible that most of these bodies are dominated by union members or sympathizers, making such waiver votes likely in many cases.

The constitutional amendment component is what creates the potential for converting the exercise into pure posturing. That would be the outcome if a floor amendment were adopted to “tie-bar” the proposals together, meaning neither could become law unless the other did also. At the moment they are not “tie-barred” - loophole aside, lawmakers are still “shooting with real bullets” in the sense that at least SB 7 can easily garner the simple majority needed to pass both the Senate and House and be signed by the governor.

Senate Joint Resolution C, however, is “Dead On Arrival” in the House, because for a constitutional amendment to advance it needs a two-thirds majority vote. Republicans have this margin in the Senate, so if all GOP members were united in favor, the proposal would go to the House even if all Democrats opposed. (There’s no guarantee that Republicans would all vote “yes,” however; already one GOP member of the committee, Sen. Mike Kowall, voted “present” on SB 7 - the functional equivalent of "no" vote.)

The House is a different matter. Republicans have a 63-47 majority there, which is 11 short of the required two-thirds majority to pass SJR C. Republicans may have hopes of “picking off” a few Democrats who represent more fiscally conservative districts, but that’s unlikely, and there is no chance they could pick up the 11 needed.

Actually, there are good reasons for including a constitutional amendment. If SB 7 becomes law, government employee unions will certainly sue to keep their benefits flowing. The legal grounds for such a challenge by state employees are not easily dismissed, but they would disappear entirely if the Legislature's power to impose a 20 percent co-pay requirement were explicitly authorized in the Constitution. (In contrast, school and local governments would have little or no grounds for a lawsuit.)

It will be argued that SB 7 only applies to the employees of public schools and other governmental units, but not those who work for the state itself, because the current constitution turns-over the power to set their compensation levels to a state Civil Service Commission. In addition, state universities also could be expected to use certain ambiguities in the current constitution to sue if the state tried to impose the 20 percent co-pay mandate on them. According to information submitted to the Senate committee that approved the measure, employees at nine of 15 state universities currently pay less than 20 percent of the cost of their health benefits. (This may be the case at some or all of the remaining six, also.)

However, a legislative package that includes a “Really Might Pass” bill with a “Dead On Arrival” constitutional amendment creates a tempting opportunity for posturing by politicians wanting to look “tough on unions” for fiscally conservative voters, while simultaneously giving a “no worries” wink-and-nod to the politically powerful government employee union bosses.

If  it were done, the deed would be committed with an amendment “tie-barring” SB 7 to SJR C. This means the bill could not become law unless the constitutional amendment also did. Given that the SJR C is guaranteed to die in the House, lawmakers in both bodies could then vote “yes” on SB 7 knowing that it will never become law, even if passed with huge majorities.

Incidentally, this is exactly how Republican lawmakers ducked accountability back in 2001 for halting a gradual repeal of the Single Business Tax. In that instance, the "tie-bar" linked a measure to continue the gradual repeal to a bill that Gov. John Engler had already announced he would veto.

There is another way that the Senate could play role of “Lucy” for fiscally conservative voters, as in “I’ll hold the football and you kick it, Charlie Brown”:  Just never bring SB 7 up for a vote. That will ultimately be the call of Senate Majority Leader Randy Richardville.

While the loophole in this bill is serious and real, the tie-bar threat is pure speculation at this point. Although so far this year Michigan’s Legislature has been timid compared to Wisconsin and Ohio in scaling-back the privileges of government employee unions, they have still passed some politically-challenging measures on this front. Nevertheless, the price of liberty – and for fiscally conservative voters the price of reform – is eternal vigilance. In this case, vigilance against posturing politicians.

Note: An earlier version of this article stated that the "loophole" applies to public school districts. However, it only applies to local governments.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.