The legislation outlining House Speaker Dillon’s state health insurance plan was tabled on Friday, a 13-page bill that finally outlines the details of the controversial concept.
In short, what Dillon (D – Redford Township) proposes is a statewide insurance system that would pool all Michigan state and school employees into a broad set of health plans in an effort to save money on the Michigan’s employee insurance expenses – $1 billion a year, according to Dillon.
Although it’s unlikely that Dillon’s plan will really save the state as much as he claims, the tabled legislation confirms that his plan would be a step in the right direction.
Here’s a quick rundown. The plan would:
- Allow the state to develop a (smaller) selection of plans for public employees with the cost of the plan based partly on private-sector insurance;
- Create a pool into which all state and school employees would pay premiums to fund the program;
- Establish a 13-member board to represent unions as an overall plan is created;
- Shift the cost of health care towards Michigan state employees by increasing out-of-pocket expenses for high end plans;
- Establish state oversight of medical diagnosis and treatment for plan holders; and
- Allow employers to opt-out of the plan if they could provide their own coverage at 5% lower cost.
Dillon’s plan would not:
- Impose specific plans on employees – they would still be able to choose from within the (admittedly smaller) selection established by the state;
- Choose specific insurance companies to provide coverage;
- Eliminate unions’ ability to negotiate the terms of their specific policy within the overall plan;
- Determine a specific cost for the program.
It’s easy to see why the unions are uncomfortable with the bill, but it has the potential to be good for the state. Any attempt to balance the negotiating power between state employers and the unions should achieve some measure of cost savings.
More emphasis on coverage for “wellness and prevention programs, such as smoking cessation, weight reduction and alcohol abuse treatment” may also be a part of the bill. Although preventative care generally does not save money, good lifestyle decisions generally do reduce health care spending.
State employees will be encouraged make these smart choices if the cost of their health care is indeed shifted to them via higher co-pays and deductibles as the article suggests it may be.
Giving employees control over their health care dollars – and the incentive to make good lifestyle decisions – was a major reason that such significant cost-savings were achieved by the Whole Foods health insurance plan. A shift towards high deductible plans and health savings accounts for Michigan state employees could make Dillon’s proposal a major success story. If, on the other hand, the plan allows state and school board employees to force the costs of their health care onto their employers it’s unlikely that significant savings will be achieved.
Dillon has shown willingness to use outside-the-box thinking to try to reduce spending on public benefits, which are drastically out-of-line with what private-sector employees in Michigan can expect. The specifics of the plan will ultimately determine how likely it is that it will be a success.
Michigan’s books are in dire straits – let’s hope Andy Dillon will continue to make gutsy moves as his plan evolves in the House.