LANSING – House Speaker Andy Dillon (D-Redford Township) today announced a major overhaul of Michigan's state employee health care system that is expected to yield close to $1 billion in savings annually. The overhaul consolidates the hundreds of different plans serving Michigan's hundreds of thousands of public sector employees and retirees, allowing for huge administrative savings, competitive pricing to drive down costs and standardized benefits more closely aligned with those in the private sector.
"With Michigan facing spiraling deficits and massive unemployment, reforming health care for public employees has never been more urgent," Dillon said. "By making the same plans available to everyone – from the local bus driver to the Governor – we will save Michigan taxpayers $900 million a year, preserve health care coverage for our workers and save jobs.
The health care overhaul is the first in a series of reform proposals from Dillon that will change state government to increase efficiency and generate long-term savings. Details on the proposals can be found on NewIdeasForMichigan.org on Friday. Dillon's health care reform plan will:
- Consolidate the planning, delivery and administration of health care for Michigan's public sector employees and retirees under the Office of the State Employer, increasing efficiency and enabling the state to obtain more competitive pricing in plans and prescription drugs.
- Standardize coverage to allow all public employees and retirees to choose from the same set of health care plans, which will be more closely aligned with those offered in the private sector.
- Ensure that all health care plans serving public sector employees and retirees follow best medical practices, which will increase patient safety and prevent unnecessary treatment. The state will offer its health care plans to all residents and businesses once the transition to the new system is complete, making affordable health care more accessible in Michigan.
Currently, employees and retirees across Michigan participate in hundreds of different health care plans offered by the state as well as counties, cities, townships, school districts and other local units of government. Each plan differs in costs and quality and assesses its own administrative fees. Studies show that Michigan's public sector employees and retirees generally receive health care benefits that are more generous and more expensive than their counterparts in other states and in Michigan's private sector.
"For too long, Michigan has wasted precious tax dollars on an inefficient patchwork of thousands of separate, widely varying health care plans for its public sector employees and retirees," Dillon said. "This drains state resources essential for our economic recovery, threatens the jobs of police and firefighters and takes funding away from teachers and classrooms. We have got to change if we want our state to move into the 21st century."
Reforming public employee health care has been identified by well-respected non-partisan organizations including Public Sector Consultants and the Center for Michigan as one of the best ways that Michigan can achieve substantial long-term savings.
"We cannot afford to keep doing business as usual," Dillon said. "Starting with this comprehensive health care reform, we must accelerate our efforts to streamline government and make lasting changes that achieve significant savings while allowing us to protect the jobs of our workers and families. These reforms are necessary to make Michigan a fiscally stable state – one that does not rely on painful budget cuts or periodic tax increases to survive."