Getting Creative on Public Workers' Health-Care Costs

Miami-Dade County's mayor is pushing a compromise plan that may help get this budget-buster under control.
December 19, 2013 AT 5:00 PM
By Charles Chieppo  |  Contributor
Principal of Chieppo Strategies and former policy director for Massachusetts’s Executive Office for Administration and Finance

Miami-Dade County is the latest flashpoint in the battle to figure out how the burden of skyrocketing health-care costs should be allocated between governments and their employees. In the midst of often-intense debate, Mayor Carlos Gimenez is showing that responsible compromise is possible.

Since 2010, county employees (Miami-Dade has a consolidated city-county government) have been paying 5 percent of their base salary toward group health-care costs. The deduction was designed as a temporary measure to get the county through lean times and was intended to expire this coming Jan. 1. Earlier this month, county commissioners voted to let the contribution expire as planned for most workers.

But the rise in health-care costs is unrelenting. Allowing the contributions to sunset would open a $56 million hole in the county's $4.4 billion operating budget for this fiscal year and create an even bigger gap next year, which caused Mayor Gimenez to veto the commissioners' action.

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Along with his veto, however, Gimenez sent commissioners a countermeasure that would give a one-time bonus to the lowest-paid county workers -- about 7,800 of Miami-Dade's nearly 26,000 employees. Employees earning under $40,000 annually would get $1,500, while those earning between $40,000 and $50,000 would get $1,000. So an employee earning $30,000 would get his or her entire $1,500 health-care contribution back; a worker earning $20,000 would get his or her $1,000 back plus an extra $500.

The $10.2 million cost of the bonuses is a fraction of the $56 million cost of eliminating the health-care contributions, and going forward the county would not be faced with paying the full cost of ever-rising health-insurance premiums.

Although Gimenez' ability to sustain the veto appeared uncertain, on Tuesday one commissioner who originally voted to let the measure expire changed her vote and the veto was upheld. The fate of the mayor's bonus plan remains uncertain, with some commissioners saying they would prefer to permanently restore a portion of employees' pay. But the action avoids blowing up the county budget and setting a dangerous precedent by not requiring employee health-care contributions.

This case also highlights a basic problem with the way Miami-Dade approaches the allocation of employee health-care costs. In the long term, getting costs under control will require workers to be aware of the comparative expense of various insurance plans and have an incentive to select ones that don't offer more coverage than they require. Rather than charging all employees 5 percent, the county would be better served to provide workers with a variety of plans at different price points and have each employee pay a portion -- perhaps one-quarter -- of the plan he or she chooses.

As is almost always the case wherever this issue comes up, Miami-Dade's reaction to the employee health-care contribution issue was imperfect. But Mayor Gimenez deserves credit for coming up with a creative compromise. And if the county commissioners go along with something along the line of Gimenez' bonus proposal, there'll be plenty of credit to spread around.