Rising Cost of Health Care
3:58 pm
Tue November 24, 2009

Kentucky Chamber Wants Public Workers to Kick in More for Health Coverage

Bowling Green, Ky – The Kentucky Chamber of Commerce wants state employees to start paying part of their health insurance premiums. The state-wide business group says these payments would help to offset revenue shortfalls that could threaten a number of state programs, including funding for education. But, the Kentucky Education Association says the Chamber's proposal is a step in the wrong direction.

Under the plan proposed by the Chamber, public employees would be asked to contribute 50 dollars per month to the cost of their individual health insurance coverage. Chamber president David Adkisson says at this time, many state employees pay nothing toward the cost of their individual coverage.

"The cost of healthcare for public employees and teachers and state retirees has grown five times faster than the state's general budget," Adkisson said. "And those costs have grown five times faster than our economy has grown and the cost increases are simply unsustainable. The public employee benefits are very rich by standards of other states, and they're very rich by in terms of the private community, in other words, companies here in Kentucky."

Adkisson says these are tough budget times, but the state could save a considerable amount of money by getting employees to contribute to the cost of their individual health coverage.

"Our proposal is that public employees chip in $50 per month to their premium," Adkisson says. "That's less than 10 percent and that would save the state over $200 million in the next annual budget. $200 million would go along way in helping the state through this recession and the fact that the state government is really struggling for the money that it needs."

But John Wilkerson, deputy executive director of the Kentucky Education Association, says his group disagrees with the findings of the Chamber report.

"The report is misleading," Wilkerson says. "The reality is that the state pays 85 percent of the cost of the premiums and that employees pay 15 percent."

Wilkerson says he's concerned that the Chamber's proposal could lead to real hardships for some public employees who are already having a hard time getting their paychecks to last through the end of the month.

"They are trying to balance the budget on the backs of state employees," Wilkerson says. "We can understand that's a reflexive response of employers when faced with a cash flow or a budget challenge want to cut the compensation of their employees to fix the problem. But we think, enlightened employers, and we hope the state is one of those, understand that valuing, respecting, treating their employees well, will pay dividends in the long run."

The study raises some interesting questions for Brian Strow, professor of economics at Western Kentucky University.

"Yes, if you took the 50 dollar suggestion that the Kentucky Chamber of Commerce had, it's not an overkill suggestion," he says. "They showed in this report that it could save $200 million in the next budget. Is that going to solve the whole budget shortfall? No. But it saves $200 million. So that's maybe teachers that don't get furloughed, maybe it's university professors that can now be hired instead of keeping the lines open with class sizes going up. "

But John Wilkerson of the Kentucky Education Association argues that the plan could be especially difficult for some retirees, including retired teachers.

"It would include those people who are already paying $500 plus a month for dependent coverage," Wilkerson says, "it would also be retirees. So it's a very broad brush proposal that they've made."

And WKU economist Brian Strow agrees that such a plan could be difficult for those on fixed in comes.

"There's no question if you're already in retirement when premiums go up, that's going to be burdensome," Strow says. "I guess one of the points the Kentucky Chamber tries to make is that, that's the reality for everyone else right now too, be they employees at Western, be they employees in the private sector, we've all seen our premiums go up without our income going up. Why would state employees be different?"

Kentucky Education Association representative John Wilkerson argues that the Chamber plan would also have a cost in terms of lost morale.

"It's counterproductive in terms of morale of the staff," he says. "Rather than try to take away from hard working school employees, I think we ought to be talking about really reevaluating their working conditions or students' learning conditions to try and see how we can make teaching a more attractive career so we can get the best people for Kentucky's future."

But Chamber president David Adkisson says the budgetary problems in Kentucky are serious enough that something needs to be done. And he believes the Chamber proposal on health insurance is a good place to start.

"We certainly value the services of our public employees and our teachers," he says. "But at a time like this, when state government is broke, when the economy is on its back, we've got to all have some skin in the game in terms of how we make this happen."

Members of the Kentucky Chamber of Commerce are hoping members of the General Assembly will raise the issue in the upcoming session of the General Assembly.