On Jan. 1, 2012, public employers like Washtenaw County will be prohibited from paying more than $5,500 for health benefits annually for a single employee, $11,000 for an employee plus spouse, or $15,000 for family coverage. However, the law allows a public employer, by a majority vote of its governing body, to choose another option: to pay not more than 80% of the total annual costs of all the medical benefits plans it contributes to or offers its employees and elected public officials.

The vote – if given final approval at the board’s Dec. 7 meeting – means that collective bargaining agreements entered into by the county on or after Sept. 15, 2011 must comply with the 80/20 rule. Five of the county’s 17 bargaining units, representing about 95 employees, do not yet have agreements with the county for 2012-2013. Those employees would be subject to the 80/20 rule, which will place more responsibility on employees for the cost of health care.

This brief was filed from the boardroom of the county administration building at 220 N. Main St. in Ann Arbor, where the board of commissioners holds its meetings. A more detailed report will follow: [link]

The goal is to develop a plan to provide better health care for the county’s low-income residents, the uninsured and people on Medicaid – prior to changes that will be mandated by the federal Patient Protection and Affordable Care Act.

The Washtenaw Health Initiative (WHI) is a collaboration led by retired Saint Joseph Mercy Health System chief executive officer Bob Laverty, former county administrator Bob Guenzel, and retired University of Michigan treasurer Norm Herbert. The effort is jointly sponsored by the UM Health System and Saint Joseph Mercy Health System, and faciliated by Marianne Udow-Phillips, director of the Center for Healthcare Research & Transformation – a joint venture of UM and Blue Cross Blue Shield of Michigan. Several other groups, including Washtenaw United Way and the county public health department, are also involved.

Organizers say they hope this initiative will become a model for other communities nationwide that are facing similar issues.

Details of exactly what kind of services will be provided, what funding and other resources will be tapped, and how a coverage plan will be implemented haven’t yet been determined. Initial steps that could occur as early as this year include reaching out to enroll about 6,000 county residents who are eligible for Medicaid but not currently signed up for that coverage. Another project that could be implemented this year entails coordinating local dental clinics to offer sliding scale fees for low-income residents.

More information is available on the initiative’s website. [.pdf of WHI press release] [.pdf of Washtenaw County health care overview]

The working session also included a presentation by executives of the Southeast Michigan Council of Governments (SEMCOG) and a brief update on the progress of the jail expansion. This report focuses on the health benefits presentation.

Cost of Health Benefits

Jennifer Watson, the county’s budget manager, began the report by giving an overview of current costs and a comparison of expenses over the past five years in the major categories of health care: medical, dental, life insurance and long-term disability. Medical costs are the largest expense, projected to be $19.779 million in 2010 – an amount that includes coverage of about 1,350 employee positions as well as about 700 retirees. That cost represents a 33% increase from $14.833 million in 2005.

Washtenaw County employee health care costs from 2005 to 2010. (Links to larger image)

Dental costs climbed 19% during that five-year period, from $1.09 million in 2005 to a projected $1.3 million this year.

However, medical and dental costs were even higher in 2009 – $22.8 million and $1.44 million, respectively. Union concessions and a shift from HMOs to Blue Cross/Blue Shield PPOs accounted for much of the cost savings in 2010.

The health benefit costs include amounts paid by the county as well as modest employee contributions. Most union employees pay no contribution toward their health care. However, all of the county’s 184 non-union employees contribute $600 annually. Members of four unions – representing a total of 51 employees – pay $400 annually. Those include members of the Assistant Prosecutors Association, the Public Defenders Association, and two bargaining units of the Michigan Nurses Association. There are 17 bargaining units representing county employees, and each negotiates its own contract with the county.

The county is self-insured for its medical and dental costs, buying its coverage through Blue Cross/Blue Shield – that company is projecting significant annual increases in the coming years, Heidt said. In addition to standard benefits offered by the county, employees can choose to buy additional optional coverage, at their own expense.

Impact of Federal Reforms

Going year by year, Heidt outlined several changes anticipated from recently passed federal health care legislation. Starting this year, the county will be reimbursed for part of the health care costs for retirees over the age of 55 who aren’t yet eligible for Medicare. Only $5 billion in subsidies were available nationwide and employers had to apply to be selected. Heidt said that the county’s application was accepted, and reimbursement began in July.

In 2011, employers must extend coverage to the married or unmarried dependents of their employees through the age of 26, unless the dependent is covered under another plan. This is expected to add a 1% to 1.5% cost increase, Heidt said.

Also in 2011, employers will be expected to offer plans that include preventive health care services. This won’t impact the county, Heidt said, because their coverage already includes preventive care. Nationwide, the change is expected to increase costs for employers by 3.5% to 4%, she said.

An additional change next year is that health care plans can’t put lifetime dollar limits on certain coverage. However, the county has never had an employee hit their lifetime limits, Heidt said, so she doesn’t expect this to be a factor. Also starting next year, employers will be required to enroll their workers in a new public long-term care program starting in 2011, unless the employee opts out. It will be paid for through a mandatory payroll deduction.

Fewer details are known about changes coming in 2012 and beyond, Heidt said. There will be significantly more reporting requirements to the federal government in 2012, she said, and in 2013 there will be a new Medicare payroll tax for people with wages over $200,000 for individuals or $250,000 for joint filers.

One fairly significant impact would occur in 2018, Heidt noted, when the county would be required to pay a 40% excise tax on its health coverage, which is considered a “Cadillac” plan by the federal government. A “Cadillac” plan is defined as a plan in which the aggregate annual value of an employee’s health coverage exceeds $10,200 for an individual or $27,500 for a family. Heidt said they’ll need to decide how to address this issue in the coming years.

Heidt also informed commissioners that as part of their open enrollment this fall, the county would be doing a complete audit of its employees to determine whether dependents that are claimed for coverage are actually eligible. She said that typically, up to 12% of employees in an organization have ineligible dependents covered by their health care plan. It’s possible that savings from this effort will amount to 5% of the county’s overall health plan.

Heidt also described a fringe benefit workgroup that’s being formed, with representatives from most of the county’s labor groups. It’s in preparation for contract negotiations that will begin next year, she said, and will be a comprehensive review of benefits. The idea is to make sure that everyone has an understanding of how costs are derived for benefits. The effort will start later this month, and likely continue through mid-2011.

Commissioner Comments, Questions

Leah Gunn asked whether the reimbursement for retiree health coverage would save the county money. Heidt said they expect that it will – retirees account for about 30% of the county’s total health care costs. The federal program will reimburse employers 80% of the cost per retiree in excess of $15,000 and below $90,000.

Gunn asked if they had any details about the long-term care coverage that would be required in 2011. Heidt said that it’s one of the things they know very little about – it hasn’t been defined by the federal government. She said she’d update the board as details emerge.

Jessica Ping said that the company she works for has a wellness program, which offers incentives when employees do certain things, like quit smoking or get regular cholesterol testing. She wondered whether the county had explored offering something similar. Heidt said they’d looked into it, but that there are significant upfront costs for these programs. It would likely be three to four years before they’d see a return on that investment, she said.

Wes Prater asked for more details about the dependent audit that the county planned for this fall. He wanted to make sure that employees are informed about it. Cheyenne Cooper, the county’s benefits manager, told Prater that employees would be asked to provide some kind of validation, such as a birth certificate, to prove that their dependents are eligible for coverage. She said they would be communicating with employees well in advance. The county’s roughly 700 retirees won’t be part of this audit.

Kristin Judge said that she’d like to see more consistency among the different employee groups – among the unions, as well as with non-union employees. Heidt said it was one of the administration’s goals, too. Judge clarified that if an employee waives the insurance benefits, they’re entitled to a cash stipend.

Judge noted that the National Association of Counties (NACo) had been active in developing the federal health care legislation, and that the organization had resources that Washtenaw County – as a member – might tap. She also urged the human resources staff to be sensitive in their audit of dependents, saying she didn’t want employees to be embarrassed.

Mark Ouimet asked whether the county had identified a total aggregate amount that they’d be able to afford for employee health benefits. Heidt said that they hadn’t approached it that way, but that she’d appreciate direction from the board as they tackle the 2012-13 budget deficit. Ouimet praised the staff for being forward-thinking on this issue.

Ken Schwartz commented on the 40% excise tax, saying it seemed counter-intuitive that the federal government would want to tax good benefits while at the same time encouraging employers to offer better benefits. Heidt said that the county has eight years to explore its options.

Ping asked whether the county had considered increasing the premiums that employees pay, noting that $600 and $400 annually is “nothing.” [For many employees, those contributions are negotiated as part of their union contracts. Most county employees with union contracts make no contributions to their health care costs.]

Prater noted that the fringe benefits workgroup provided an opportunity to establish a standard for benefits, and to include benefits in a discussion about total compensation. It’s important that employees understand that the more they receive in fringe benefits, the less they’ll get in salary increases. He pointed out that the county will be facing some very difficult times in the coming years.

John Dingell, the longest-serving member of the U.S. House of Representatives, spoke at the Saturday morning meeting of the Ann Arbor Democratic Party. Dingell represents the 15th District, which includes Ann Arbor. (Photos by the writer.)

U.S. Rep. John Dingell got his biggest round of applause at Saturday morning’s meeting of the Ann Arbor Democratic Party when he described his preference for health care reform as a single-payer system – a proposal he’s been pushing for decades.

But during much of the 45 minutes spent talking and fielding questions, Dingell described a compromise working its way through Congress that falls far short of that goal.

Dingell is the lead sponsor on the House of Representatives health care reform bill, which differs in substantive ways from the Senate’s version. Those two versions of the legislation will need to be reconciled over the coming weeks.

President Barack Obama is urging Congress to deliver something for him to sign before he makes the annual State of the Union address, Dingell said, adding that it’s not clear if that deadline will be met.

Dingell covered much of the same ground on Saturday as he did when The Chronicle last encountered him at a meeting of the Obama Caucus of Ann Arbor in August. But by now, the massive health care reform legislation is closer to completion – though it’s not, Dingell reminded his fellow Democrats, a done deal.

Legislation “We Can Be Proud Of”

Dingell told the group of about three dozen Democrats, meeting at the Ann Arbor Community Center on North Main, that Congress was on the road to wrapping up health care legislation “which I hope we can be proud of.” While the final version will likely provide coverage for an additional 30 million Americans who are now uninsured, it won’t go as far as Dingell would have liked. “Is it enough? The answer is no, it is not enough,” he said.

Ned Staebler, who's running for state representative in District 53, shoots video of John Dingell at Saturday's meeting of the Ann Arbor Democratic Party. Another candidate for the state District 53 spot – Jeff Irwin, a current county commissioner – also attended the meeting.

Dingell laid much of the blame for that on his colleagues in the Senate, saying he’s had a “structural dislike” for the Senate – ever since he saw as a boy the many ways that senators could delay action. And since then, he said, “they’ve only gotten better at it.” [Dingell's father, John Dingell Sr., was first elected to the House in 1932. Dingell himself has served since 1955, the year his father died.]

During his talk, Dingell touched on some of the major differences between the House and Senate versions. [Copies of an Associated Press article, published by the Detroit Free Press and explaining the House and Senate versions, were passed out at Saturday's meeting.]

One of those differences is the public option – a government-run health care plan that’s part of the House bill, but not in the Senate version. At the August meeting Dingell attended, held at the Ann Arbor home of Judy Dooley (who was also at the Saturday gathering), he said he’d do everything he could to keep the public option component. On Saturday, he told the group not to give up on the public option, but that it would be a hard fight to keep it in the final bill. [Later in the day, news reports described the public option as "doomed."]

Another battle could be fought over the new insurance exchanges called for by both the House and Senate versions. These exchanges – a mechanism for consumers and small businesses to buy insurance from providers – would be run by the federal government in the House version, while the Senate would give that role to the states.

Dingell said he thinks House speaker Nancy Pelosi will stand firm on the House version, but he described the process of reconciling the two bills as a “game of legislative chicken.” It will probably involve “ping-ponging” the versions from the House back to the Senate and vice versa, he said, coupled with extensive discussions among Congressional leaders. This approach is more likely than hammering out an agreement in conference committee, Dingell said.

Dingell acknowledged the controversy over the fact that conference committee meetings for health care legislation haven’t been opened to the media, a move that recently prompted the head of C-SPAN, Brian Lamb, to write to House and Senate leaders in protest. [.pdf file of Lamb's letter]

In addition to his comments about health care reform, Dingell offered an opinion on the 2010 elections. They’ll be difficult, he said, but he urged the group not to buy the story that Democrats will lose control of the House and Senate. He suggested that the federal budget and jobs will be among the major campaign issues. While some of the federal economic stimulus efforts show signs of success in producing jobs, Dingell said he hopes Obama doesn’t make the same mistake that Franklin D. Roosevelt made in the 1930s when he pulled back on some of the New Deal initiatives too early.

In concluding his remarks, Dingell noted that his own legislative priorities include passing a food safety bill that would be the biggest overhaul of that industry since 1938, plus similar legislation to better regulate the prescription pharmacy and cosmetics industries.

Lou Glorie, vice chair for programs for the Ann Arbor Democratic Party, pressed Dingell on whether he would vote for the Senate version of the health care bill, if a compromise couldn't be reached. Sitting in front of her are Doug Kelley and Stu Dowty – officers of the Washtenaw County Democratic Party.

Questions for Dingell

Several people had questions for Dingell, focused primarily on the health care legislation.

Lou Glorie commended Dingell for his health care op-ed published by Yahoo! in November. She asked him to clarify his remarks on the “ping-ponging” process, and wanted to know if he’d be willing to vote for the current Senate version of the legislation.

Dingell said he was only speculating about the course of action that Pelosi would take in reconciling the two versions – he wouldn’t swear that this would be her approach, he said.

Describing the current state of the U.S. health care system as “intolerable,” Dingell said he wouldn’t commit to voting on anything at this point. He said at the end of the day, they’ll all have to decide if the legislation is good enough to move forward – but he’d be loathe to throw away the progress they’ve made, saying this was the most difficult undertaking he’d experienced in his career.

It’s not the bill he would have written, Dingell added. However, he wanted to wait and see what the final version would look like. “Let’s push the process as hard as we know how,” he said.

A woman who told Dingell she was a nurse by profession asked how long it would take before health care reforms were enacted. Her patients are dying – they didn’t have health insurance, and therefore didn’t get the screening tests necessary to diagnose diseases before they became life-threatening, she told Dingell.  “I want as much as we can get, as soon as we can get it,” she said.

Dingell said that after legislation was passed, there’d be a period required to write the accompanying rules and regulations, plus put the financial component in place. The Senate version sets the year for enactment at 2014 – the House version is a year earlier. He hoped the final legislation stays closer to the 2013 timeframe, and that they can address some issues even earlier – like closing the Medicare Part D “donut hole,” or addressing the practice by some insurers of denying coverage because of pre-existing conditions.

Jeff Pearson's son, Henry, was identified as the youngest Democrat attending Saturday's meeting – and got a shout-out from Dingell.

In response to a question about new recommendations regarding mammogram screenings, Dingell said he was “thoroughly outraged” about it. [In November, the U.S. Preventative Services Task Force recommended that women wait until they reach the age of 50 to begin mammography screening. The advice has been controversial, with groups like the American Cancer Society speaking out against it. Some have suggested that the timing was politically motivated to coincide with the debate over health care reform.]

Dingell reported that he’d met with medical professionals from the University of Michigan Medical School on Friday, who told him they weren’t planning to follow the new proposed guidelines.

In a question unrelated to health care, Gus Teschke asked about financial regulatory reforms being proposed by Sen. Chris Dodd and Rep. Barney Frank, noting that their legislation doesn’t call for the break-up of big banks. Teschke asked what could be done to make that happen.

Dingell said he’d like to see the Glass–Steagall Act reinstated – it kept the industry honest. That legislation, passed in the 1930s in the wake of the banking crisis of the Great Depression, was repealed during the Clinton administration. Dingell recalled that Dodd was a strong advocate for the repeal, and said that Frank’s bill is much better than current law regulating the industry.

The meeting wrapped up at noon, though Dingell and his wife, Debbie Dingell, stayed to talk with people who attended, including Ann Arbor city councilmembers Sabra Briere and Tony Derezinski. Dingell also spent a few minutes chatting with The Chronicle – we are unable to break any news about whether the 83-year-old congressman will run for reelection. That announcement will come at the appropriate time and place, Dingell said [which wasn't Saturday at the Ann Arbor Community Center].

U.S. Rep. John Dingell shakes hands with Conan Smith, chair of the Ann Arbor Democratic Party and a Washtenaw County commissioner, at Saturday's meeting at the Ann Arbor Community Center.