Battle lines forming over Iowa state employee health benefits

Governor Terry Branstad confirmed earlier this week that employee contributions to health insurance premiums will be a major battleground during the next round of contract negotiations with unions representing state workers.  

At his weekly press conference on July 2, Branstad announced that he will start paying 20 percent of his health insurance premiums.

“Hard working Iowa taxpayers are accustomed to paying a significant amount for their health costs whether they’re working for a private sector business or a non-profit or, of course, if they’re self-employed they’re paying 100 percent,” Branstad says. “And for far too long the tax dollars of these hard working Iowans have gone to pay the entire cost for most of our state employees’ health care.”

About 94 percent of state employees get all their health insurance premiums covered by the state under the current state employment contract. According to Branstad, the state would save more than $100 million if all workers paid 20 percent of their premiums, but Branstad says there is no consequence for workers who do not volunteer to pay part of their health care premiums and no threat of worker layoffs if the state doesn’t cut costs in this way. […]

Branstad has asked other statewide elected officials to give up part of their salary to cover 20 percent of their health care premiums, but he’s not asking the 150 members of the Iowa legislature to do it.

“That’s up to them,” Branstad says.

Branstad will give up $224 from his pay each month to cover the premium for himself and his wife. Lieutenant Governor Kim Reynolds has agreed to give up $153 of her monthly salary to cover 20 percent of the cost of her health insurance plan.

“I’m excited to take the first step, along with Governor Branstad, towards state employees contributing to the cost of their health care,” Reynolds says.

According to Radio Iowa’s O.Kay Henderson, three Republican statewide elected officials have already agreed to follow Branstad’s example on health insurance premiums: Secretary of Agriculture Bill Northey, State Auditor Dave Vaudt, and Secretary of State Matt Schultz.

I have no doubt that Branstad’s idea will be popular with Iowans, who may wonder why public employees should get health insurance “for nothing.” But even considering their generous health insurance benefits, Iowa’s public employees are far from overpaid. Andrew Cannon of the Iowa Policy Project explains:

While it is true that public employees contribute less on average to their health insurance plans than private-sector workers, they have negotiated the benefit as part of overall compensation packages that, all political hyperbole and “conventional wisdom” aside, typically leave public employees behind their private-sector counterparts. As IPP research has demonstrated, public workers tend to be paid considerably less than similarly educated workers in the private sector. Generally better health insurance benefits do not compensate for the deficiency, so a gap remains.

After controlling for experience, education, and other demographic factors, public-sector employees still receive 6 percent to 8 percent lower overall compensation – that is, pay, health, dental, life and disability insurance, and retirement benefits – than private workers.

This pdf file contains a more detailed report by Cannon comparing wage and benefits packages for public sector and private sector employees in Iowa.

Keep in mind that Branstad paid virtually no state income taxes last year on income that exceeded $190,000. Contributing to his health insurance policy won’t break the bank for him. The same can’t be said for the average Iowa public employee. AFSCME is the largest labor union representing state employees, and its leaders released this statement responding to Branstad’s proposal:

“It’s outrageous that Terry Branstad thinks it’s okay to bully hard working state employees. It’s not fair to compare himself to a mail clerk or a custodial worker with the State of Iowa,” said AFSCME Iowa Council 61 President Danny Homan.

According to a Des Moines Register article from today, Branstad claims he will now pay $224 a month. According to a February 2011 Associated Press article, Branstad receives a $130,000 salary and a $50,000 pension. This new health care contribution represents 2.1% of his $130,000 salary. If you include his $50,000 pension, his new health care contribution represents 1.5% of his State of Iowa related income.

For a newly hired State of Iowa mail clerk or custodial worker with a $24,169.60 starting salary, Branstad’s plan would result in a pay cut ranging from 5% to 18%. For a newly hired State of Iowa correctional officer, motor vehicle enforcement officer, or airport firefighter, Branstad’s plan would cut their pay from 3% to 12%.

“For 18 months, Terry Branstad has been taking the same health care benefits as state employees and our members, while attacking our members at the same time. Yet he hasn’t paid a dime. For eighteen months Branstad has been doing the same thing he attacked us for. Now, four months before the election, he is pulling a political stunt by volunteering to pay for what he has already received for eighteen months,” said Homan.

“Terry Branstad needs to stop playing political games. Health care is something our members take seriously. Many of our members work in environments where their personal safety is on the line: correctional workers can be injured or infected by inmate attacks and DOT workers can be hit by reckless drivers. Our members have also repeatedly given up pay increases and made sacrifices for many years and Branstad refuses to acknowledge that,” said Homan.

“If Terry Branstad wants to have a serious discussion about the cost of health care we will have one with him at the appropriate time: at the bargaining table this Fall. Under Iowa’s collective bargaining law, the Governor does not get to personally bargain this with each individual state employee,” added Homan.

Those contract negotiations will be as contentious as they come. Branstad will feel emboldened by the results from the Wisconsin recall election this summer. But I don’t expect labor unions to give in easily. Their bad blood with this governor goes back more than two decades, when AFSCME went all the way to the Iowa Supreme Court to force the Branstad administration to abide by the existing wage contract. Last year, Homan became a plaintiff in the successful court challenge to Branstad’s line-item vetoes relating to Iowa Workforce Development offices.

Although the politics of this issue may play well for Branstad, the governor doesn’t have a great track record on predicting what the state can and can’t pay public workers. In late 2010, Branstad and his staffers insisted that Iowa could not afford to give public employees about a 3 percent raise two years in a row, as outgoing Governor Chet Culver had agreed to do. After failing to convince AFSCME to reopen negotiations, Branstad eventually gave up trying to block the union pay raises from going into effect and gave non-union state employees a similar raise.

Despite the allegedly “unaffordable” union contracts Culver negotiated, Iowa finished the 2012 fiscal year with a larger than expected surplus, thanks to revenues that exceeded projections. It turns out that spending $100 million per year on small raises for employees who took a hit during the recession wasn’t disastrous after all. (AFSCME members took a pay cut in the form of furloughs to avoid layoffs during the 2010 fiscal year.)

Final note: I hope the governor is feeling better today after a choking episode landed him in a California emergency room yesterday. The feeling of choking is terrifying for anyone. For an uninsured American living on the edge, a trip to the ER means a hospital bill that might exceed the monthly rent or mortgage payment. Like State Senator Joe Bolkcom, I hope the governor will reconsider his determination to leave more than 100,000 Iowans without health insurance coverage through Medicaid.

UPDATE: Iowa Policy Project Assistant Director Mike Owen points out that Branstad might be exaggerating how much money the state would save if the next round of public employee contracts included employee payments toward health insurance:

He is ignoring the fact that, unlike his pay and that of state legislators, state employees’ benefits in place are a result of bargaining – a point acknowledged far too little, but thankfully was cited this week by the Muscatine Journal’s Steve Jameson. State employees agreed on the pay levels they receive in the context of other benefitsthey al so receive.

Oddly, when the Governor says state workers should pay $1,000 toward their health insurance, he is peddling it all as savings to the state. Actually, we should expect salaries to go up to compensate for lost benefits.

Jameson also commented,

It isn’t like the state just started paying the health care costs of its workers. This has been a benefit that has been provided to state employees for decades. It was negotiated at a time when state workers made less in real wages than their private sector equivalents.

It would be great to see everyone in elected government office take Branstad up on this challenge and pledge to pay for 20% toward their premiums. But if I’m an unelected state worker I’d be laughing in Branstad’s face. Who in their right mind would give up a benefit they have been given unless or until they were forced to give it up?

Maybe if the state were really struggling financially,  it’d be easier to applaud Branstad’s efforts – but the state just reported taking in a record amount of tax receipts in the month of May. The $794.5 million deposited in the state treasury broke a previous record of $791.1 million in net receipts reported in May 2007, according to the Legislative Services Agency. The state is on track to blow away its projected revenue budget for the year.

SECOND UPDATE: Branstad’s executive order allowing state employees to contribute to their own health care costs is here (pdf).

THIRD UPDATE: In an editorial supporting state employee contributions for health insurance premiums as part of the next negotiated contract, the Des Moines Register’s editorial board noted that it’s not clear where these voluntary contributions will go.

How will the state workers’ monthly contribution – ranging from about $90 to $360 – be used? Workers are told their premium payment “remains in your department and is used to offset personnel cost.”

What does that mean when agencies have set their budgets for a fiscal year that began on July 1? If workers at the Department of Inspections and Appeals agree to pay 20 percent of the cost of their insurance, will director Rod Roberts hire more nursing home inspectors?

That is hard to believe. The “Voluntary Premium Contribution Program” is the idea of a governor who has talked repeatedly about the need to cut state services and personnel. Branstad says there are too many of the workers he is now asking for a donation toward their health insurance. The agency directors he appointed will decide how to spend the premium money their employees pay.

Considering the premium can amount to the loss of hundreds of dollars a month in income, some state employees might decide they can put that money to better use to truly serve Iowans. They could donate it to food banks, offsetting a cut the governor made to a legislative appropriation earlier this year. They might give it to an agency serving children whose state funding has been reduced or to a group advocating for bike trails.

  • misconception

    For an uninsured American living on the edge, a trip to the ER means a hospital bill that might exceed the monthly rent or mortgage payment.

    There is no correlation between insurance status and frequency of ER visits. A comprehensive study found that:

    Contrary to popular perceptions, communities with high ED use have fewer numbers of uninsured, Hispanic, and noncitizen residents. Outpatient capacity constraints also contribute to high ED use.

    reading the study, one finds that ER visit rates were lower for the uninsured relative to both Medicaid and Medicare enrolless, but on par with privately insured.

    A recent study is consistent:

    In conclusion, although adjusted [emergency department] use rates were similar for insured adults and uninsured adults, those with recent changes in health insurance status had greater [emergency department] use,” the researchers wrote. “Adults with new Medicaid coverage were disproportionately likely to use [emergency departments], suggesting that their reduced out-of-pocket cost for care was not associated with increased access to primary-care services.”

    The study was published in the March 26 online edition of the Archives of Internal Medicine as part of the journal’s Health Care Reform series.

    A more honest discussion would center on whether Medicaid/Medicare participants have sufficient access to primary care services. Doctors opting out is a real problem that temporary bumps in reimbursement rates don’t address. Second issue: the preference to use the emergency room for “need it now” instead of waiting for a scheduled appointment. This does not correlate to insurance status.

    The campaign against “freeloaders” who are making “you and me pay with their irresponsibility” is incredibly dishonest and mean-spirited.

    I 100% agree that Branstad “stepping” up to co-pay is ridiculous theater given his circumstances. That said, zeroing in on Branstad’s shortcomings diverts attention from the new normal now established by ACA: larger deductible, larger co-pay, low actuarial value health insurance.

    In states that hypothetically decline the Medicaid expansion, the “newly eligible” will instead get subsidies for the exchanges. The drive behind the Medicaid expansion was to make the newly eligible ineligible for the exchanges, and thus subsidies, as I recall. This is a mixed bag — larger co-pay but greater access to care.

    “Somebody” will have to pay for the subsidy allocation beyond the Medicaid budget. This can only be higher exchange premiums or an increase in penalties above the 2.5% AGI post-2016. Generally speaking, the original cost estimates were not realistic anyway, so this will hold, regardless.

    The union position is problematic because everybody else is subjected to higher co-pays, spiraling premiums, and the all but guaranteed exchange dumping by companies. You are telling those in the “private sector” that electing not to carry insurance due to affordability issues is freeloading. You are demanding that the young buy-in to support everyone else. The Democratic position is that 60%-70% actuarial value on policies is acceptable for everyone else. The Democrats have adopted the language of “personal responsibility.” All of this is inconsistent with a carve-out exception for those employed by the government, don’t you think? Where’s the “fair share” and “shared responsibility?” And comparisons to the private sector make no sense unless you factor in ACA on the issue, and what it means going forward.

    Today in the newspaper of a very large public school in a Dem-friendly state, an article discussing how students with “pre-existing conditions” are not necessarily supportive of ACA. I quote:

    (Peters, diabetic student) “I can understand how uninsured diabetics would at first think the upholding of Obamacare is a great thing,” she said. “But because I already insured through a great plan that provides coverage for all diabetic supplies, I am not happy and I am worried about how this plan will affect my personal coverage.” Peters said she was fortunate enough to get full insurance coverage, proof that plans do exist, even for a condition like diabetes.

    A higher number of high-risk patients supported by insurance companies concerns not only Peters (diabetic student) but many Republican leaders who fear lower-quality coverage at a higher price.

    Reality is beginning to set in beyond the “personal stories” and demagoguery v insurance companies by the very same people who now insist that not purchasing insurance products from the “vultures and parasites” would be antisocial.

    It is a difficult sell, politically, to carve out an exception from this mess for Dem interest groups like unions. Just a fact. The situation is obviously more complex than the “talking points” coming from professional Democrats when you have people with pre-existing conditions breaking bread with Republicans.

    I have noticed that on this blog. Comments that are insufficiently supportive of the talking points are either ignored or downrated. I really don’t understand where professional Democrats are going with this. Unions are upside down in public opinion because the nr of Republicans + those subjected to a poor deal >> public sector union members. As the legislation is implemented, more and more people will start looking at the subsidy calculator, esp as rumors in the office swirl about new co-pays or companies electing to opt-out. Trying to bully people into not looking at their own bottom line is a waste of time, and the lack of advocacy for stronger legislation by Dem “activists” has led to the crabs in a barrel effect the unions are experiencing.

    • addendum

      Steve King is not needed to block ObamaCare.

      If Iowa turns down the Medicaid $, then the “newly eligible” go to the subsidized state exchanges. If Iowa doesn’t set up the exchanges, the Feds step in, but no subsidies would be available, see?

      Any honest person, including supporters of universal health coverage, understands that this legislation is critically flawed in a number of ways. Union management offered up faux criticism and bluster, followed by sheepish, then unrestrained cheerleading. Now they want to maintain the status quo for themselves? I guess it would be nice to turn a blind eye to premium increases, reduced benefits and increased co-pays.

    • You have written an off-topic diary, not an on-topic comment.

      You ended with a gratuitous swipe at the blog.  If you think that the proprietors are consistently insufficiently welcoming, why are you here? Blogs abound.

      • If

        by “proprietors” you mean operatives from campaigns that take contradictory positions on hcr for political convenience, then I’m guilty as charged.

        With respect to “off-topic,” I do not agree. Unions were the #1 supporters of legislation that even supporters of UHC describe as severely flawed. Unlike social legislation of the past, this legislation discriminates between classes of people which is why it is politically unstable. Public sector unions want to be exempt from the uncertainty of the very legislation they adamantly supported.

        The basis of hcr is that services like ER visits, tests etc are overutilized and the many pieces work together to discourage overutilization, which includes the “skin in the game” disincentive the unions are now allergic to. Greater co-pays for fewer services are supposed to make us more frugal when it comes to health care. And the ER issue is not one of the dangerously irresponsible sticking others with their bills, which is why several states have been looking at redefining what constitutes an emergency:

        Few objected when the state said it needed to prevent Medicaid patients from running up pricey emergency-room bills for such nonemergency conditions as sunburn, acne and diaper rash.

        But when doctors, hospitals and parents got wind that the state’s plan also would limit visits for such potentially serious conditions as abdominal pain, breathing trouble and some types of hemorrhage, the proposal unleashed a torrent of criticism.

        The plan would cap ER visits to three per year for such so-called nonemergency conditions. As lawmakers and state agencies struggle to close a $5 billion shortfall, this is one of many attempts to pare medical assistance to low-income residents – from adult dental care to support for community clinics.

        The proposal, state officials calculate, could save $72 million to $76 million over two years.

        “Everybody knows that emergency-room utilization is way over the top,” said Dr. Jeff Thompson, medical director for the state Medicaid program. “We simply can’t afford it anymore.”

        Like I said — the undercurrent in hcr is that too much coverage; too many opportunities to use health care leads to … overuse. If you support this legislation, then you should want everyone to work with the disincentive of a co-pay, period. Note that in several states, the privately insured using the ER for non-emergencies have been encouraged to do so by some hospital organizations to offset the low Medicare reimbursement rates.

        Finally, per your advice — for a long time, I was a co-owner of this blog. I will probably always take an interest, no matter how much it upsets you. I suggest you take it up with desmoinesdem with a request to ban or whatever makes you happy.

        • Well, you explained your presence here.

          Since your contributions are not given the attention you think they deserve, I only wondered why you bothered to make them. I am not upset by this. I think it’s an odd hobby, but people do much worse things on the internet.  It is news to me that desmoinesdem had a “co-owner,” and I have been reading here for about four years. I should really try to keep up.

          My prior observation was because you quoted this:

          For an uninsured American living on the edge, a trip to the ER means a hospital bill that might exceed the monthly rent or mortgage payment.

          and responded to it with this nonsequitur:

          There is no correlation between insurance status and frequency of ER visits.

          There was no mention of frequency or correlation in the sentence you quoted. And you teed off on it with a really long rant about health care policy that would be better situated in a diary of its own, rather than dangling from a comment about the Governor’s choking incident.  But suit yourself.


          • ok, but

            There was no mention of frequency or correlation in the sentence you quoted.

            the governor isn’t uninsured, either.

            Since your contributions are not given the attention you think they deserve

            Democrats are free to keep rolling along while slinging tropes describing an alternative reality. The ER issue has been very much part of the conversation recently as Pelosi, Wasserman-Schultz, and even Vilsack on IPTV raise the “uninsured in the ER” horror making “you and me” pay their bills even though “they” have the means to pay. It’s a 2012 Democratic version of Reagan’s Cadillac welfare queen. Quoting Pelosi:

            These free riders make health insurance for those who are taking responsibility more expensive. Personal responsibility is a principle of our country. Conservatives claim it. Progressives claim it. Liberals claim it. We all claim it.

            AFSCME is in between a rock and a hard place — precisely because they have embraced this position, which is just an extension of “having some skin in the game.” Well, now, Branstad is just asking them to take some of that “personal responsibility” that progressives and liberals claim.

            Of course, progressives and liberals have never made these claims. At one time, what you call a non sequitur. would have been sufficient reason to examine these claims carefully.

          • yesterday in Nation

            I only wondered why you bothered to make them.

            I read that Dems are now pledging to revisit “public option” “in the future,” whatever that might mean. I think it’s always the case that squeaky wheel get the grease. I also note that the campaign against ER scofflaws appears to have died fairly quickly. I guess it wasn’t polling well internally, surprise. Similarly, “accept poor legislation or the little girl dies!” is a loser.

            The problem with acquiescence and silence is that the battle is over before it starts. I think “personal responsibility” for other people is a hard sell. I would eat the loss and avoid a WI showdown, but via negotiation, not mandatory volunteerism. I think it’s difficult to separate the demands for union co-pay from the hcr marketing.

            I should really try to keep up.

            True, I spent no time telling people to go elsewhere.

            As far as my “contributions” are concerned, the point was that you won’t don’t the needle by scolding, ignoring opinions you don’t like or the utilization of tropes. Apparently, even the Democrats have figured this out.    

  • DMR op-ed today

    on this issue. I agree 100%. Co-pay, yes, part of negotiations, not “voluntary” peer pressure type nonsense.  

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