Editor’s note: This commentary is by John Franco, a Burlington attorney who has been active in health care reform for over 25 years.
[T]he recently released School Boards Association report that most school boards will enjoy huge savings from single payer is an object lesson how single payer can be a trap for the unwary if organized labor is not very careful.
While some of the savings identified in the School Boards Association report are legitimate efficiencies, most are simply a cost-shift from the school districts onto teachers in the form of higher co-pays and deductibles and a higher share of the plan premium. According to the report, school districts are paying 86 percent of their premium costs. That is a higher employer share than the 75 percent of premium cost which is generally thought to be paid by employers on average in Vermont. If financing of single payer is to reflect this average overall “maintenance of effort,” the contribution from school districts will drop by 9 percentage points. In terms of payroll, school districts are currently pay 22 percent of payroll toward their health plans. This would drop to under 15 percent of payroll under single payer, depending on the size of the district. (The association used Hsiao estimates which are out of date and do not account for the fact that any employer contribution will have to be graduated in order to avoid clobbering small employers, half of whom do not now provide coverage at all).
This report finally brings into relief the long lingering question how collectively bargained health plans can and will be integrated to a single payer system.
According to the numbers provided in the School Boards Association’ report, teachers currently contribute on average 3.6 percent of their pay toward premiums. That percentage of contribution will not change much under single payer, where household contributions are likely to be in the 3-4 percent of income range. What does change is the level of teacher out-of-pocket contributions. According to the Schools Boards Association’s report, teacher plans have an actuarial value of 94 percent. Under Act 48, Green Mountain Care is to have an actuarial value of between 80 percent and 87 percent [a difference not culled out of Act 48 in conference. Compare 33 VSA §§1822(a)(5)(A) and (c)(1) with 33 VSA §1825(a)(2)]. That would mean a huge cost shift to teachers and a significant reduction in their disposable incomes unless the school districts were to make up for it with supplemental coverage or compensating salary increases.
This report finally brings into relief the long lingering question how collectively bargained health plans can and will be integrated to a single payer system. Teachers in South Burlington just went on strike over much, much smaller cost shifts in their coverage plan. A single payer could become a Trojan Horse which achieves an undreamed of cost shift onto teachers that even the most hidebound of school districts would not now dare at the bargaining table.
