An Inconvenient Truth

The County pays less for health insurance for each MCPS employee than they do for each county government employee; yet the County Council appears intent on cutting funding for health insurance for MCPS employees.

Earlier this week the County Council’s Office of Legislative Oversight issued a report entitled “Achieving a Structurally Balanced Budget in Montgomery County: Options for Long-Term Fiscal Balance”. While the report was a data rich compilation of information about the county budget, it was woefully imbalanced. Of the report’s more than 200 pages, only seven pages were devoted to analyzing the county's revenue issues and only three pages are devoted to the county's burgeoning debt service expenses.

So what's the rest of the report about? Employee salaries and benefits. In contrast to the paucity of options concerning county revenues and county debt expenses, the report contains dozens of recommendations for cutting employee salaries, cutting employee health insurance, and cutting employee retirement plans.

Many members of the County Council seem obsessed that MCPS employees generally pay 10% of their health insurance premiums while county government employees generally pay 20%. But those numbers obscure a more important fact buried in the very same report.

The fact is that the Montgomery County Government pays more per participant for employees in the county government’s health plans than the school board pays per participant for MCPS employees.

The MCPS premium structure is a 90/10 split on the point-of-service plans as well as the dental, vision and Caremark drug plans. The split on the HMOs is 95/5. This was done intentionally in order to provide an incentive for participants to enroll in lower cost, more tightly managed health care plans.

The good news is that this voluntary incentive has worked. Approximately 60% of MCPS employees participate in one of the HMOs.

The Council’s own staff report confirms that the county pays less for health insurance for each MCPS employee than it does for each county government employee:

NOTE: Bold = Plan with highest enrollment

Source: Montgomery County Council, Office of Legislative Oversight, “Achieving a Structurally Balanced Budget in Montgomery County: Options for Long-Term Fiscal Balance”, page 108, December 7, 2010.

That's right. Even despite the fact that the county only pays 80% of their costs versus an average of about 93% in the school system, the per capita employer costs for health insurance within MCPS are lower. The county typically pays $500 more per month per family for health insurance.

Why? That's the question the county government should be asking.

Part of the answer is because for 20+ years the MCPS unions have worked in partnership with the school district to promote cost containment (not cost shifting). We have created a number of incentives in the plan to encourage the use of the most cost effective health care options: incentives for generic drugs and mail order drugs, disincentives for emergency room use, incentives to enroll in lower cost, more tightly managed HMOs.

To increase the employee share of HMO premiums to a flat 20% would eliminate the incentive for enrolling in these lower cost, more tightly managed health care plans. Eliminating that incentive would likely increase overall plan costs.

Such a change would also have a disproportionate impact on employees in the HMOs. Quadrupling the cost of their share of insurance premiums would cost them an additional $2,343 a year. For a bus driver earning $25,000 a year – that’s almost a 10% cut in pay.

As the old saying goes - people who live in glass houses shouldn't throw stones. MCPS - in partnership with the unions here - have done a much better job of controlling the overall cost of health care than the county government has. The County Council should be encouraged to find out why the county government's insurance is costing the county more than MCPS' insurance. That's the real question.