Government

State sees savings from collective bargaining changes

Public workers paying more for health insurance under switch

The Senate Chambers in the Iowa Capitol Building in Des Moines on Wednesday, Mar. 7, 2018. (Stephen Mally/The Gazette)
The Senate Chambers in the Iowa Capitol Building in Des Moines on Wednesday, Mar. 7, 2018. (Stephen Mally/The Gazette)
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DES MOINES — The state of Iowa is experiencing a $44.86 million net gain in 2018 from a reworked public employee health insurance plan that is costing an extra $13.2 million for thousands of state workers — many who no longer are allowed to bargain collectively for benefits.

Group insurance coverage through Wellmark for employees of the executive, legislative and judicial branches — excluding regent institutions — dropped from a $339.8 million premium cost in 2017 to nearly $308.2 million for about 20,400 participants under the new plan that took effect Jan. 1, according to the state Department of Management.

The state’s employer share dropped from nearly $322.2 million last calendar year to $277.3 million this year, while employee costs spiked from $17.6 million in 2017 to $30.85 million this year. The $13.237 million yearly increase compares with a $979,874 rise in 2017, when most unionized workers’ health benefits were covered under Iowa’s collective bargaining law.

"...I would point out that in these difficult budget years this certainly is a benefit. Had these numbers not gone this direction, if we hadn’t done last year’s legislation, it would have been much more difficult.”

- Jason Schultz, R-Schleswig

“This is certainly the direction that we would expect things to go,” said Sen. Jason Schultz, R-Schleswig, one of the architects of the sweeping public-sector collective bargaining changes. “I think we’re seeing the first benefits of the state being put on a level playing field with the private sector and the taxpayers benefiting from last year’s Chapter 20 legislation.”

Along with the law changes that have public employees paying more, state officials projected one-time savings to the state by changes that consolidated six insurance plan options into two. Decisions by employees to leave state coverage for lower-cost alternatives, such as a spouse’s plan, and a decline in the executive-branch workforce — which has gone from 19,398 in January 2011 to 16,432 now — are also driving state savings.

“I’m glad to see that this is the direction the numbers are going and I would point out that in these difficult budget years this certainly is a benefit. Had these numbers not gone this direction, if we hadn’t done last year’s legislation, it would have been much more difficult,” Schultz said.

Projections for the 2019 group insurance plan expect a nearly $24.3 million overall cost increase, with the state shouldering $21.9 million of the higher premium and employees an extra $2.48 million, according to the management agency.

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Sen. Nate Boulton, a Des Moines Democrat running for his party’s 2018 gubernatorial nomination who led opposition to labor-law changes in the Iowa Senate, said the impact on state employees has been a double whammy. The state also has cut back on overtime pay for many wage workers.

“When you partner those things together, it’s a major impact on state employees and their families,” Boulton said.

“It’s atrocious...They’re trying to balance their budget on the backs of hardworking men and women.”

- Danny Homan, President of AFSCME Iowa Council 61

Given the drop in state employment and other factors, Boulton said the $13.2 million increase in health insurance premiums for state workers “is the absolute lowest and probably underrepresents the actual cost to those working families.”

Danny Homan, president of the American Federation of State, County and Municipal Employees Council 61, the state’s largest public-sector union, predicted last fall that the law changes that barred negotiations over benefits would cause a significant cost shift. “It’s atrocious,” said Homan. “They’re trying to balance their budget on the backs of hardworking men and women.”

Because the state’s one-year cost reduction for the current calendar year was spread over two fiscal years that are on a July 1 to June 30 basis, the half-year reductions and higher costs amounted to small benefits of about $3 million in each fiscal year, so the impact on the state budget was minimal, according to a Department of Management analysis.

Figures from the state Department of Administrative Services showed that full-time AFSCME state employees covered under the least expensive option formerly paid $20 a month for either a single or family plan. Under the new design, that increased to $40 per month under the single rate or $150 per family for the Iowa Choice option; or $93 a month for single coverage and $273 per family under the National Choice option.

Those employees formerly could also have chosen more expensive plans with enhanced benefits — ranging up to $335 a month for the costliest option, figures show. So, state officials said it was possible that despite the overall cost increase to employees, some could see premiums decrease if they moved from the most expensive family plan in 2017 to either family plan in 2018.

Under both Wellmark options, there is a $250 deductible for single coverage and $500 for family coverage. Copays for visits to a primary care provider would be $15 or $30 for specialists. Out-of-pocket expenses would be capped at $1,000 for single coverage and $2,000 for families.

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While the redesigned plans represent a substantial cost increase to many, the new rates are far less than what the average Iowan pays for health insurance offered through the workplace.

A 2016 employer benefits study by D.P. Lind Benchmark, a research firm in Clive, found average employee contributions in Iowa were $1,112 for a single plan and $4,840 for a family plan.

Under the current rates, the state employees would annually pay between $480 for the cheapest single plan and $3,276 for the costliest family plan.

In past years, when public employees were allowed to bargain for salary as well as benefits, many chose to forgo larger salary increases to avoid higher premiums.

During the 2017 legislative session, majority Republicans in the House and Senate revamped the collective bargaining law to remove health insurance and other benefits as subjects for negotiations — except for the State Police Officers Council, whose roughly 600 members still bargain over benefits.

Former Gov. Terry Branstad signed House File 291 into law before he resigned as governor to become ambassador to China. AFSCME and the Iowa State Education Association both have challenged the law with the issue ultimately to be decided by the Iowa Supreme Court.

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