In 2011 Michigan Republican Legislators passed Public Act 152. The law capped the amount of money a public employer can pay for its employee’s health insurance. The law also impacted people who choose not to take the health insurance and instead take a cash amount in lieu of the insurance. The cash in lieu amount is typically a lot less than the cost of insurance so the public employer saves money when an employee chooses this option. The employee, who typically has coverage through a spouse, makes a few extra dollars. This is truly a win-win situation. Enter the Republican Legislature.
According to the Department of Treasury, PA 152 requires that the cash in lieu amount be counted in the insurance cap but that the contributor not be counted as being in the cap. So this causes the average (I hate to use the word average because this is not an average and makes no sense mathematically) to be skewed and may cause some public employers to exceed the cap. That forces districts to either raise the employee’s cost of the insurance, lower the cash in lieu amount, or a combination of both. If the cash in lieu amount is less lucrative the employee may instead take the district’s insurance causing the employer to pay out as much as $10,000 more for each person who makes the switch. Now, everyone looses.
These are the kinds of idiotic things that occur when the government comes between an employer and an employee trying to negotiate a fair contract. Governor Snyder, who signed off on this legislation, previously said that he will ensure that our “government is open, fair and accountable to the citizens.” Not only has he failed on those three, he seems to be failing at making government smarter. I wonder what 0-4 averages out to on his calculator?
Update: On June 13th, 2013 the Michigan Department of Treasury updated the PA 152 Frequently Asked Questions. It now reads “A public employer does not need to include in their total annual medical benefit plan amount any stipend it pays to employees or elected public officials who choose to opt out of taking health insurance.” As far as I can tell, no new law was passed. It appears the Department of Treasury changed how they interpret PA 152.