MEA Report on Health Costs

In response to Speaker Dillon' s proposals to reduce costs of school employee health care, the MEA has released a report. There are some good points brought out in the report. However, some of the statistics of the report need correction. Since I have become the MSBO "guru" on the Kaiser Family Foundation (Kaiser) annual report on employer provided health insurance and also was until recently the longest serving MSBO member on the MDE Bulletin 1022 Committee which helped create the FID (CEPI's Financial Information Data), I guess I am the one that must correct them. So my apologies in advance to my friends in the MEA, but the factual errors must be corrected.

First, let me say that I believe the report's assumption that schools pay more for administrators' health (dental, vision, and disability) coverage on average than teachers. I assume this is true. So, administrators should not throw stones. We live in glass houses.

Secondly, I assume the report is correct in stating that other support staff have lesser coverage. I also assume that in many cases support staff do not have employer provided coverage. It is probably also true that support staff, (cooks, parapros, secretaries, custodians, etc.) are more likely to be part-time.

Third, I have no reason to doubt the report's statement that school employee's are paying a larger share of health care costs on average. This appears to be true nationally if the Kaiser study is to be believed. (See exhibits 6.3 and 6.4 of the Kaiser study which confirm that employee's share of premium costs have risen annually the past 10 years.)

The MEA report claims that schools in Michigan pay less for employer provided health care than employers in the private sector. The Kaiser statistic refers to the $12,680 average annual premium cost of employer provided health insurance in 2008. This statistic is then compared to a FID report statistic that says the average cost for teacher health coverage paid by schools was $12,159, see page 8 of the MEA report.

This comparison is misleading. I assume it is unintentional. However, it needs to be corrected.

The Kaiser figure of $12,680 refers to the total premium, i.e., the employer's and the employee's share for FULL FAMILY coverage. In exhibit 6.4 of the Kaiser study on page 77, it states that of this amount the employee's share is on average $3,354 and the employer's share is $9,325. (There's a $1 rounding somewhere.)

I presume that the FID data of $12,159 is correct, but did not verify it.

I believe a more accurate comparison then is comparing the $12,159 or the school employer's sharer of health care costs in Michigan with the $9,325 employer's share in the Kaiser study.

In addition, the Kaiser study also reports the premium for single coverage. The average single coverage premium cost is $4,704 (Exhibit 6.3, page 76.) Of this amount, the average employer's cost is $3,983 and the average employee's share is $721.

The Kaiser average amount paid by an employer for health coverage would have to fall between the $9,325 figure for full family and the $3,983 figure for single coverage. This blended average statistic is not in the Kaiser report, at least that I can find. But again, it would be somewhere between $3,983 and $9,325.

Thus whatever that figure is should be compared to the $12,159 from the FID less a reasonable estimate for excluding life insurance, dental, vision, and disability which are included in the FID numbers but not in the Kaiser figures. (The MEA report suggests these benefits are about 12 percent of the total, however, they did not mention disability in their report which would bring this figure up a tad higher.)

The Kaiser study further reports that 65 percent of employee's have employer provided health care nationwide. So, the fact that many support staff in Michigan don't have coverage is probably an unfortunate reality in line with the national statistics.

In conclusion, the MEA report does bring out some good points. However, this posting is attempting to correct an "apples to oranges" comparison in the MEA report which I presume was unintentional. Thus, I am simply attempting to correct any misrepresentations that the report may have created.

Based on "apples to apples" comparison of Kaiser data to Michigan school teacher health costs, it appears to me that the employer's share of teacher provided health insurance is greater than the employer's share of health costs per the Kaiser study.

To my knowledge, the details of Speaker Dillon's report have not been released. When those details are released, I hope that there will be thoughtful and spirited discussions and review.

Kaiser's annual study points out annually that health care insurance premiums are rising at rates significantly faster than the overall inflation rate. This is a national problem, not just a Michigan problem.

The next Kaiser study with 2009 data will be out sometime in September, if past years are an indicator. The Kaiser report for 2008 can be found at:

http://www.kff.org/insurance/index.cfm