Saving by Insurance

Lawmakers need reliable numbers for cost of Michigan employee health insurance

Now we're getting somewhere. Hearings have begun on Michigan House Speaker Andy Dillon's proposal to save the state, local governments and school districts -- by his estimate -- up to $900 million on health benefits.

Last week, House Fiscal Agency Director Mitch Bean and Center for Michigan President Phil Power called for detailed analyses, such as actuarial studies, to determine how public-employee benefits here compare with those of other states and the private sector.

This seems like a constructive step toward a consensus on the potential savings while giving fair consideration to public workers and teachers.


Various figures have been tossed around since Dillon announced his plan.

Michigan State University economics professor Charles Ballard, in a study on behalf of state employee unions, found that state workers without college degrees are on-par with private-sector workers but those with degrees earn less. But his study didn't look at the aggregate cost to employers of public worker benefits and didn't include local government workers or teachers.

Center for Michigan research revealed that states with public health care pooling, like that contemplated in Dillon's plan, paid an average of $6,435 per enrollee while Michigan paid $9,836. But the study didn't compare the actual benefits enjoyed by workers here versus the other states'.

Economics consultant Patrick Anderson -- comparing total compensation; that is, wages and the cash value of benefits -- found that the private-sector average was $40,886 per worker versus $57,788 per state worker. But Ballard argued that's an unfair comparison because a greater percentage of state workers have college degrees, though Anderson's study, unlike Ballard's, does include the cost of benefits.

While agreeing with the need for an actuarial study, we urge lawmakers to keep in mind the urgency of the state's budget crisis. The study should be quick and efficient. It shouldn't become a pretense for bogging down Dillon's initiative.

While they're at it, lawmakers should waste no further time introducing and vetting some other reform proposals. The Detroit Regional Chamber, for example, has suggested sentencing reforms it says would cut the nearly $2 billion prison budget by $400 million. The Grand Rapids Chamber has a detailed plan for Medicaid revamping that could save added hundreds of millions.

The sooner Michigan legislators get started, the sooner they will get to real savings that reduce or eliminate the need for harmful cuts in government service or tax increases.