HB 5345 update: Further study needed

A special state panel considering House Bill 5345, the proposed mandatory state-run health plan for public employees, is going back to square one, trying to collect data to support claims that the scheme will save hundreds of millions of dollars.

When House Speaker Andy Dillon, D-Redford Township, unveiled the legislation six months ago, he said the state could save hundreds of millions of dollars on public employee health care by “standardizing” benefits, finding efficiencies, and eliminating collective bargaining rights.

But after a grueling schedule of hearings that began this fall, committee chair Rep. Pam Byrnes has appeared increasingly short and frustrated with the lack of data supporting the alleged savings. Incredibly, she seems concerned that those opposing the effort haven’t been able to substantiate any savings of a state plan.

“It’s very hard to critique something without having figures in front of us,” said Byrnes, who heads the Public Employee Health Care Reform Committee, a special panel that Dillon chose to consider his legislation.

In October, a study prepared by Public Policy Associates Inc. found that a state plan would actually cost the state hundreds of millions more – and that any potential for savings would come from benefit reductions and increased employee contributions toward the cost of health insurance.

Byrnes has assigned representatives to five work groups, each investigating different aspects of House Bill 5345. The committees are supposed to report back to Byrnes by Dec. 31, an incredibly tight deadline considering the legislative agenda and upcoming holidays.

The work groups were created to “speed this process along,” Byrnes said last week. The groups will look at: administrative cost efficiencies; prescription drug purchasing; plan elements and op-out provisions; board composition and appointment; and retiree health care.

Responding to questions from lawmakers at last week’s hearing, Adam Miller, who negotiates benefits for UAW members, told lawmakers that the UAW would have to ask public employers for information such as enrollment data and actual costs. He encouraged lawmakers to ask public employers for the data they need.

In other developments at the Dec. 3 hearing:

• Two lawyers, including one hired by the House of Representatives, testified that the bill does not violate the state Constitution as it relates to classified state employees or university workers. Gary Gordon, who works for the Dykema law firm, advised lawmakers to not prescribe limits to coverage or very specific benefits because that would be harder to defend. He suggested the state could offer a range of benefits and, by doing so, avoid any constitutional challenges.
• Howard Bunsis, an accounting professor at Eastern Michigan University, questioned alleged savings of a state-run plan. Collective bargaining has led to cost savings at Eastern, he said, where faculty pay 15 percent of the cost of their health insurance. Any savings that result from a mandatory state plan, he said, will come from “more out of pocket costs for our members and less benefits.” See video of Howard Bunsis testimony.

The House committee meets again Thursday.

Updated: December 16, 2009

Watch all video from HB 5345 hearings.

Hearing 8 Presentations:

Dr. Frederick Askari, Chair, University of Michigan's
Committee on the Economic Status of the Faculty

Paul Hufnagel, President, Michigan Professional Fire Fighters Union

Bryan Epling, President, International Association of Fire Fighters, Local #421, Lansing

Dr. Brent Knight, President, Lansing Community College