Municipal Health Costs and Teachers’ Unions

I am responding to some comments I have seen here and also thinking about today’s Globe editorial on this topic.

As a teacher and committed union member I think the recent spate of comments about teacher unions are WAY off as a generalization.  I do not dispute that some unions are stubborn about health costs but the proposed statutory solutions (forcing everyone to GIC, allowing town managers to change health plans without bargaining, etc.) punish all unionized employees.

The degree of labor-bashing in the discussion of municipal budgets generally is way, way out of hand in my view.  The underlying issue is the decrease in revenue due to the recession, reduced federal support due to years of stupid tax cuts based on trickle-down economics, unwillingness to create a progressive tax structure or increases taxes on those who can more afford to pay, etc.  This revenue shortfall does cause a problem when met with inflexible labor attitudes but that is the end of the chain and labor should not be the scapegoat here (as it was, for example, in today’s editorial).

In my view there is no excuse for taking away bargaining power because unions are seen as intransigent — unless of course you plan to also do that when management is intransigent, which also happens.  And there is no excuse for telling employees they cannot negotiate health benefits.  Suppose the next step is, someone feels salaries are excessive but unions won’t give in.  Then perhaps we should pass a law preventing public employees from bargaining over salaries too.  Etc.

I have no problem with interest-based bargaining which was mentioned in one of the posts here re Lawrence.  However that is about the attitudes people bring to the table, not the legal restrictions on what they can do.  Attitudes can’t be legislated.

Where I teach we negotiated a contract this year which increased copays and made other changes to make our plan the same as or better than GIC in both cost to the town and benefits for us — without being forced into a state-run program we could never control.  As a result we saved several teachers’ jobs.  Our  leadership knew this was the tradeoff, knew our $5 copays were no longer viable, etc.   Under the proposed solutions that force people to GIC this would not be allowed as I understand it.

There are teachers’ union locals that do not show this level of flexibility but then it is the city’s responsibility to bargain with them and stand up for what they (the city) believe.  That’s what bargaining is about.


10 replies on “Municipal Health Costs and Teachers’ Unions”

  1. I understand the reservations that unions have about current change proposals. But I think that what’s hard for unions to see is how impossible the current dance is. Plan design changes are relatively minor issues (compared to other work place issues) and should be made often to respond to changing conditions and emerging understandings of how to control health care costs. Yet, to make any plan design changes currently municipal managers have to reach agreement with not just one union but often a dozen unions with different priorities. It is an elephant dance that just cannot be done in the necessary timely way — it usually takes a year or two. See my earlier post for an elaboration of these thoughts. The Group Insurance Commission offers a great set of plans and manage them very well.

  2. Hi Will …

    Thanks for the comments.

    I agree that the issue of managers dealing with multiple unions is a real problem, and I believe that some unions don’t get this. Perhaps requiring joint bargaining on health costs is one way around that — isn’t there an option for this now? Perhaps it would work to require it, or to require it in order to avoid some form of penalty or loss of bargaining rights. I don’t really like that but I can see it might be necessary.

    However, I completely disagree with the idea that plan design changes are inherently minor. If you really believe this I think you are missing the fact that the terms of health coverage are a key part of compensation that employees receive. How many people are willing to take a lower-paying job because it has a good health plan? Within reason, many are. But if the plan can be changed unilaterally while the rest of the compensation has to be bargained when the contract is up, you’ve given a huge amount of power to the towns and taken away a key bargaining right for employess.

    Yes, if the copay goes from $15 to $20 that’s not huge for most employees. But say the prescription tiers change from 10/20/35 to 20/40/75. Say mental health coverage is significantly altered. Say an annual maximum on some form of treatment is imposed. Say the new plan requires people to switch doctors. Etc. Any of those could cost some people thousands of dollars a year. If the employer can change my benefits by that much without bargaining about it, what good is the contract?

    Put another way, suppose the union agrees to a 3-year contract with a certain package of compensation and benefits beginning September 1. If I understand correctly, in the proposals under discussion, on September 2 the town manager can announce plan changes that cost members amounts that are quite substantial relative to income, and unions would have no opportunity to bargain about this kind of change in compensation until the end of the contract. If I were running the union this would drastically alter my willingness to enter into multi-year agreements and/or to give way on other things.

    I get the problem you describe, but thsi seems like an awful solution that is highly one sided and unfair, and might also have serious unintended consequences.

    Another thought — has anyone tried sitting down with some union people (probably somewhat behind the scenes) and trying “interest-based bargaining” about this problem itself? It strikes me as ironic that people want unions to be more cooperative about this yet want to pass a law that is a one-sided imposition of a solution. Maybe this kind of conversation has been had, but I haven’t seen it.



    1. I would agree that the total configuration of a plan can be a big compensation component. And the solution that I advocate in my earlier post is not to give managers unilateral ability to vary the terms arbitrarily. Rather, I would argue that they should be free to change plans among plans that have the same elements as the GIC plans. The GIC plans are used by so many people that they cannot be changed without a lot of political visibility. (Yes, I know the copays went up this year, but I’m on that plan and that’s the kind of change that I think we need to be prepared to live with in tough times.)

  3. I understand what you are saying — I didn’t mean that the proposal to allow unilateral change was one you were supporting. But it did seem to be what the Globe was advocating.

    It seems like the implementation of this could be tricky — how do you determine what “has the same elements” as the GIC Plan? — but I get the idea.

    Do current legislative proposals contain this sort of protection or are they more unilateral?

    1. Right now, there three flavors formally pending — the Governor’s original move which only slightly tweaks existing law, the MMA proposal which goes to full plan design flexibility, and the Senate approach which created a complex arbitration mechanism to facilitate changes. My view and the MMA view is that the Senate approach is unworkable (overly complex) in practice. My sense is that the MMA and other advocates for change are open to the structured approach that I have advocated, but it has taken not off in the conversation.

  4. I agree with Tom that I do not like the tone of the Globe articles, and I am not in favor of any law that would allow municipalities to force this on their unionized employees.
    I felt that what was particularly innaccurate about the Globe article was that it compared municipal employee’s health care plans to comparable employees in the private sector but ignored the earnings discrepancies between these two groups. As a teacher in the 4th Q of 2009 (a recession), I earned just over 7% less than the median employee with an advanced degree–or anything above a bachelor’s degree (that according to the BLS:
    When times are economically better, we municipal employees were not seeing double digit pay raises, bonuses or astronomical cost of living increases. In fact, during those times, municipal coffers were swelling while we negotated modest raises in exchange for the status quo on our health care packages.
    The proposed plan to force us onto the GIC would likely ignore the concessions that we have made in the past, and at best compensate us for current increases in health care costs that might arise.
    Worse, I can pessimistically envision a lot of instances across the commonwealth in which vindictive or union-bashing mayors, administrators, etc. use the threat of teh GIC to drive a wedge between the union and its members (“accept the following concessions in this round of negotiations, or we’ll put you onto GIC”).
    Has any thought been given to creating a “menu” of GIC options (maybe 3 or 4) that mirror the majority of communities (with different copays, contribution rates, etc), so that if we are to force changes in municipal plans, the changes will not be overly drastic?

    1. I don’t think you’ll see the GIC trying to mirror the cadillac-type municipal health plans. The problem with the very generous plans is that they encourage inefficient use of care. Part of the reason that the GIC is able to control total costs is that it prices care through copays, etc., so that patients give some thought to the care they choose. That’s an important fundamental — patients share some responsibility for controlling costs. It’s why Obama proposed taxing the cadillac plans — they push costs up and that’s bad for everyone.

      Regarding the comparison to private sector, I think you are right that people with advanced degrees in the private sector can often earn more. But they also don’t have rewards of teaching kids — people make choices in life, to pursue money, often in degrading ways (cold-calling selling annuities, for example), or to have the psychic rewards of taking care of people. Most people (i.e, those without advanced degrees) in the private sector earn less than teachers and work 12 months a year. Last I looked, the median straight time occupational earnings in MA were at $38K while teachers are in the $50K range. My suggestion is not that teachers are overpaid, simply that all in all the package that teachers have is pretty fair and I respectfully think more union flexibility on the health care proposals would be appropriate. I should add that my wife is a teacher.

  5. Tom,
    It would appear the only way the GIC works for Unions is if all participate which “should” bring down overall costs for both the subscriber and the Towns. If MA. mandated it for all State and Town employees it would be interesting to see the projected cost per subscriber and the projected cost savings per Town. The only way to achieve this is by taking HC out of bargaining.

    I would like to know who these folks are you suggest “can afford to pay more” and what is your criteria? Is it those making over $250k a year? If you live in Weston that is not alot of money after housing costs and taxes. If you make $100k a year in Lawrense you are either a Public employee or a wealthy business owner. So how do you define those who can afford to pay more and shouldn’t we include pensions and health benefits in the equation of a persons worth because many in the private sector have neither.

  6. Paul …

    I think (could be wrong on this) that the GIC already has enough bargaining power to bring rates fairly low, the marginal reductions for more subscribers may not be that great. The push to GIC I think is more about reducing municipal expenditures for those who come into it than a big reduction for everyone. However, I would be interested to see data / info on this.

    Re the other comment, I did not say “can afford to pay more” — I said “can more afford to pay”. It’s a different statement and carries a somewhat different meaning (and the phrasing was intentional).

    I am not very sympathetic to the Weston homeowner who feels 250K is “not a lot of money”. I am sure there are folks who earn 10x that who feel it is “not a lot of money”. I still think those folks can better afford a higher percentage tax burden than those making 100K, who can better afford a higher percentage tax burden than those making 40K or less. I myself am somewhere in the middle of all that and I have no problem whatseover with my percentage tax burden being higher than those in comparable circumstances (number of dependents etc.) who make less, even though my family finances are severely stretched by the current economic situation.

    In general I think many US tax structures are at least moderately regressive, in Massachusetts particularly so. And there has been a huge movement to reduce taxes across the US when in my view taxes were never such a big problem. Now we are paying the price for that — and for other things such as the failure to rein in health care costs, which are the big driver in all this.

  7. At the end of the day, one thing we can all agree on is the need to control health care costs. There is a different question, which is who pays for health care costs, and the two intertwine through out many conversations. But we have to find ways to achieve health that are less expensive than our current health care system, which is croaking private sector and public sector budgets across the country.

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