DES MOINES — Thousands of state employees, many who no longer are allowed to bargain collectively for benefits, could face significantly higher health care costs starting Jan. 1 under a plan that provides sizable savings to state coffers.
Officials with the Iowa Department of Administrative Services say they are unable to calculate the total cost of the 2018 state employees’ group insurance program through Wellmark until after the enrollment period ends Nov. 17. But a preliminary analysis of executive branch employees indicates the state would save $20.5 million, while costs for 18,789 workers would go up at least $11.7 million. The annual cost of the contract is estimated at $312.8 million, nearly $9 million less than now.
However, the numbers supplied by the state’s Department of Management for the calculation do not include regent system employees, retirees, state public safety officers still covered under collective bargaining and two smaller classifications that likely would push the overall employee cost share higher. There are about 5,800 regents merit-covered employees and about 4,600 retirees in the 2017 plan year. Retirees bear the full cost of premiums.
“It’s going to be a significant cost shift,” said Danny Homan, president of the American Federation of State, County and Municipal Employees Council 61, the state’s largest public-sector union.
He noted the 2018 plan redesign replacing five insurance options with just two new options could mean considerably higher premiums and more out-of-pocket costs for workers who got a 1 percent raise.
“It’s atrocious,” he added. “They’re trying to balance their budget on the backs of hardworking men and women.”
Figures from Administrative Services show that full-time AFSCME state employees covered under the least expensive option now pay $20 a month for either a single or family plan. Under the new design, that will go to $40 per month under the single rate or $150 per family for the Iowa Choice option; or $93 a month for single coverage and $273 per family under the National Choice option.
Currently, those employees can choose also more expensive plans with enhanced benefits — ranging up to $335 a month for the costliest option, figures show. So it’s possible that despite the overall cost increase to the employees, some could see premiums decrease if they move from the most expensive family plan in 2017 to either family plan in 2018.
Under both Wellmark options, there would be a $250 deductible for single coverage and $500 for family coverage. Copays for visits to a primary care provider would be $15 or $30 for specialists. Out-of-pocket expenses would be capped at $1,000 for single coverage and $2,000 for families.
While the redesigned plans mark a substantial cost increase to many, the new premium rates are far less than what the average Iowan pays for health insurance offered through the workplace.
A 2016 employer benefits study by D.P. Lind Benchmark, a research firm in Clive, found average employee contributions in Iowa were $1,112 for a single plan and $4,840 for a family plan.
Under the new rates, the state employees would annually pay between $480 for the cheapest single plan and $3,276 for the costliest family plan.
In past years, when public employees were allowed to bargain for salary as well as benefits, many chose to forgo larger salary increases to avoid higher premiums.
Administrative Services Director Janet Phipps said state officials did not ask Wellmark Blue Cross-Blue Shield to “re-price” the current group plan because they were looking for a new design with two options — Iowa Choice, an HMO offering access to providers in Iowa and contiguous counties, and National Choice, a preferred-provider organization with a wider provider network.
“Every employee is going to be offered the opportunity to sign up for health insurance,” Phipps said.
Republicans on the Iowa Executive Council — Gov. Kim Reynolds, State Auditor Mary Mosiman, Iowa Agriculture Secretary Bill Northey and Iowa Secretary of State Paul Pate — approved the new design. But State Treasurer Michael Fitzgerald, the lone Democrat, voted against it.
“The state is offering a lot less,” he said. “There’s absolutely no say for employees. This is really, ‘Here’s what you get.’ It’s take it or leave it — Hobson’s choice. There’s no input from the other side. No consideration at all. I think it’s unfair.”
But Reynolds, according to a spokeswoman, “supports the change as it’s a step in the right direction of having shared cost responsibility between employer and employee on behalf of Iowa taxpayers.”
Up until February, employee fringe benefits such as health insurance were covered under a collective bargaining law that dated to the 1970s. Former Gov. Terry Branstad repeatedly demanded that state employees pay a greater share of their health insurance costs, but his efforts were thwarted by binding arbitration rulings that favored union workers’ bargaining positions that often sacrificed higher wages to keep their health costs down.
During the 2017 legislative session, majority Republicans in the House and Senate revamped the collective bargaining law to remove health insurance and other benefits as subjects for negotiations — except for the State Police Officers Council, whose roughly 600 members still bargain with the state over benefits.
Branstad signed House File 291 into law before he resigned as governor to become U.S. ambassador to China.
“They did this to hurt public-sector employees,” said Homan. “They did this because Terry Branstad has wanted to go after state employees’ health insurance. Where’s Terry Branstad right now? He’s on the premium health insurance in China.”
Last month, a Polk County judge upheld the 2017 collective bargaining law rewrite. AFSCME officials are deciding whether to appeal to the Iowa Supreme Court.
Before leaving office, Branstad touted a voluntary plan to combine state, county, city and school districts into a governmental pool that could be in a better bargaining position to secure health insurance coverage at lower premium costs for employees.
But the idea never was offered to the Legislature, and Administrative Services officials say their focus has been on redesigning the 2018 insurance package.
Currently, it costs $521.9 million to cover 29,854 public employees through Dec. 31, with the state’s share estimated at $496.8 million and the employees’ share at nearly $25.1 million.
In calendar year 2016, the state paid $463.8 million for its employees’ group insurance program, while the 31,748 covered participants contributed nearly $20.8 million of the overall $484.6 million contract.