WISCONSIN – Act 10, which basically stripped most public sector unions of their collective bargaining rights, was a mistake.
But if there’s an argument in favor of the controversial 2011 law, it may well be the out-of-this-world health insurance benefits the city of Madison has until recently been bestowing upon its employees.
Not only were they a bad deal for Madison taxpayers; they may have precluded better wellness care for employees and — in the unfortunate absence of universal health care — are the type of thing working against a sustainable American health care system.
Act 10 prohibited municipalities from bargaining with workers over anything but base wages and required municipal employees to start paying a portion of their health insurance premiums out of their own pockets.
In 2011 before the law passed and again in 2013 when it was held up in court, Madison city managers used these coming changes as leverage when the unions came to them asking to have their contracts extended so as to spare them from the act’s most drastic effects.
First the city started making workers pay some of their premiums; now it’s looking to force employees to cover even more of their health insurances costs by instituting co-insurance payments toward an annual deductible.
If this sounds hard-hearted, it’s worth noting that most in the private sector and plenty of those in public-sector jobs outside of Madison have long been doing both. On the whole, Madison’s elected leaders have been an extremely union-friendly lot.
The line among public-sector unions has been that they’ve opted for good health insurance and other benefits over the big salaries their members could be getting for doing similar jobs in the private sector.
There’s at least some truth to this. On the other hand, the lowest-paid full-time Madison employee with health insurance benefits makes $17.23 an hour, or $35,856 a year, working as a parking cashier, according to the city’s Human Resources Department — not exactly poverty wages. The highest Madison salary is that of the city attorney, who makes $73.47 an hour, or $148,055 a year.
Out-of-pocket payments like co-insurance aren’t just a way to shift more of the ever-rising cost of health care from management to labor, though. They’re also part of that elusive effort to “bend the cost curve” in American health care.
The theory is that if people are forced to directly confront the cost of care — like by paying out of pocket — they are less likely to go to the doctor for minor ailments that will get better on their own. Multiply this effect by entire populations and the results are lower health care and health insurance costs for everybody.
This doesn’t hold true all the time and for all patients, but the most reliable data on this phenomenon, according to Kaiser Family Foundation spokesman Chris Lee, comes from a 2006 study that found that “higher co-insurance rates, with an out-of-pocket limit, can significantly reduce health care use without sacrificing health outcomes for the typical person.”
Probably more important to the average Madison employee is that requiring co-insurance payments would also free up money to create what city human resources director Brad Wirtz described as a “comprehensive program aimed at employees’ physical wellness.”
Wellness programs are another of those health care changes that much of the rest of the working world has already adopted, according to a 2012 Robert Wood Johnson Foundation paper, which also found that they are effective at lowering health insurance costs by keeping employees healthier.
In short, not only would the city’s proposed health insurance changes be cheaper for taxpayers and an ally in the broader effort to keep health care costs in check, it’s also good for employees’ physical health — if not necessarily for their financial health. (But then what’s more important: good health and good wages, or poor health and slightly better wages?)
As an added benefit, the new plan could also save the city from having to pay penalties starting in 2018 under the Affordable Care Act, which is likely to deem the current plan a high-end, so-called “Cadillac” plan.
So far, the city’s largest union isn’t so sure paying more for health insurance is a decent trade off for avoiding the Obamacare penalties and gaining a wellness program, according to Jennifer McCulley, staff representative for Local 60 of the American Federation of State, County and Municipal Employees.
The union has “concerns about having to pay more money out of pocket for insurance,” especially when it comes to the city’s lowest-paid workers, she said.
The unilateral and uncompromising approach to public-sector unions that Walker took in Act 10 was the antithesis of the collective bargaining process, which in areas less in thrall to unions than Madison usually results in productive management-labor relations and fair employee contracts.
But when management and labor come up with a health insurance policy like Madison’s, the antithesis can look pretty good.