News Story

Law that Made School Employees Pay More for Health Insurance Saved $1.3 Billion

Savings came over a three-year period

Statewide caps on government employee health insurance have saved Michigan public school districts a total of $1.3 billion since the 2010-11 school year, according to an analysis done by the Mackinac Center for Public Policy. The caps were implemented by a 2011 law.

Districts spent $1.91 billion on employee health insurance in 2010-11, the year before Gov. Rick Snyder signed the new law. It imposed either a “hard cap” on how much schools could spend on health insurance, or required employees to pay at least 20 percent of the premiums. The cost to school districts has dropped each year since, to $1.69 billion in 2011-12, $1.53 billion in 2012-13, and $1.46 billion in 2013-14.

In 2009, the average Michigan public school teacher paid just 4 percent of the premium cost for a family plan, compared to 22 percent on average in the private sector. Before the new law went into effect, teachers in 300 school districts contributed nothing toward the cost of their health insurance premiums.

Leon Drolet, chair of the Michigan Taxpayers Alliance, said the situation before the new law raised troubling questions about who was watching out for taxpayers in local public school districts.

“This demonstrates that school administrators work to benefit union employees far more than they work to benefit the kids they are supposed to be educating,” Drolet said. “School administrators don’t negotiate with unions, they collude with unions to give them lavish benefits. It’s really sad they only work to save taxpayers’ money when they are forced to do so by law. This demonstrates how much money has been wasted that could have been put toward the kids.”

Dansville Superintendent Amy Hodgson said her district has saved $736,873 from 2010-11 to 2013-14 after it dropped Michigan Education Special Services Association (MESSA) insurance for a different high-deductible plan. Because the district chose a “hard cap” on its costs, school employees haven’t had to pay any health insurance premiums.

“I do think these changes were made possible when the Legislature changed the law,” Hodgson said in an email.

Michael Sharrow, superintendent at Midland Public Schools, said the state mandate that school employees take on more of a share of health insurance costs was “good legislation.”

But Sharrow said teacher compensation was a “major issue” and something that needed to be discussed.

“For example, a starting teacher who attended four years at a university spending $100,000 to enter a field where their salary is $34,000 and they pay for health care, retirement and normal taxes — leaving them at or near poverty,” Sharrow said in an email. “Not a good investment — who is going into education today?”


See also:

Dropping Union Health Insurance Saves District $737K

More Than Half of School Districits Ignore Governor's Request for Health Care Reform

After Five Years of Deficits, District Signed Contract Paying 100 Percent of Health Care