State workers, state argue contract offer

Contract offer: Health insurance premiums would skyrocket, with workers paying 26 percent

August 26, 2010 

STATE CAPITOL AT NIGHT

The Washington State Capitol in Olympia. (Tony Overman/The Olympian)

Gov. Chris Gregoire wants state workers to pay up to 26 percent of their health insurance premiums next year, part of a hold-the-line contract offer that will include no pay raises.

One other option in the offer is for workers to keep paying 12 percent of health premiums but accept even higher out-of-pocket costs that already went up in January.

“We don’t have any money,” said Gregoire’s budget director, Marty Brown. Brown was responding to questions Wednesday about the offer that Gregoire’s labor negotiators made to unions during formal contract talks Tuesday.

The Washington Federation of State Employees has rejected the offer, which covers health, dental, vision and life insurance costs. Only the health care portion of those benefits is in dispute.

“Our best estimate is you would be taking a pay cut of $2,316 a year,” spokesman Tim Welch said Wednesday, describing the financial hit for a worker with full-family coverage in one of the two biggest worker health plans, Uniform Medical or Group Health. Welch said it is equivalent to a pay cut of almost 8 percent for a low-paid custodian.

“We’re probably in the middle of a four-year wage freeze. We’ve already taken cuts and furloughs and cuts in health benefits; out-of-pocket health costs went up dramatically Jan. 1,” Welch added.

Brown said the state’s offer is to continue paying $850 per month per worker on average for health and other insurance benefits, which translates into the state paying about 74 percent of health insurance costs. The governor’s Labor Relations Office said the state’s share of employee benefits for health, life, dental, vision, disability and retiree subsidies is running about $1 billion a year for nearly 110,000 state and higher-education employees.

The Labor Relations Office is negotiating about two dozen labor contracts with unions representing workers in general government and higher education. Agreements must be reached and ratified by Oct. 1 to allow inclusion in Gregoire’s budget proposal for 2011-13.

The rival parties were at the table again Wednesday at the Thurston County Fairgrounds, and Brown spoke because top labor negotiator Diane Leigh was tied up in talks. No formal pay offer is on the table to the federation, but Brown said the governor’s negotiators want a contract that freezes pay, including so-called “step” or longevity increases that reward a portion of workers for their experience.

The federation’s workers have made health care a line-in-the-sand issue, knowing pay raises are unlikely and job cuts are likely, Welch said.

State employees today pay 12 percent of the cost of health insurance premiums, and the state pays the other 88 percent. Minority Republicans in the Legislature have said the workers’ share is too low, despite increases in out-of-pocket costs in recent years.

Sen. Joseph Zarelli, R-Ridgefield, previously suggested an 18 percent worker share for the sake of argument. But he said Wednesday he thinks a more accurate private-sector comparison is 24 percent.

Zarelli said the governor’s bargaining position “is a good start” but might not be enough to help drive down the cost of government to fit revenues the state is expecting in the next biennium. A $3 billion shortfall is expected, and Zarelli said state costs for worker pensions also are going up, representing “a huge nut we have to crack in the next biennium.”

The federation, on the other hand, says major Northwest employers such as Microsoft, Boeing and Swedish Medical Center in Seattle pay 100 percent of health insurance costs.

Welch said the union understands the state is in “dire straits” but that there are options – including closure of tax breaks – that could help raise as much as $100 million needed to give workers relief from health care costs. He said another legislative policy change could let health-fund reserves be tapped to provide the $62 per month extra per worker he thinks is needed to avoid health cost increases.

But Brown, the director of the governor’s Office of Financial Management, said the reserve was so low a year ago that it prompted a warning from state insurance commissioner Mike Kreidler.

Brown said there is another option for the union: hold premiums even but ask workers to pay more in co-pays, co-insurance and deductibles.

“Basically, we’re not going to put in any more than we did last time per person,” Brown said. “The union basically has two choices: They can either talk about the percentage, the 88/12 that they always like to talk about, or they can talk about the changes in the benefit plan. … (The latter) means significant increases in deductibles, significant increases in co-pays and out of pocket …”

Welch said workers are outraged, and some think Gregoire is being hypocritical – noting that she wrote recently on the White House Blog that some health insurers were unfairly raising premiums by more than 40 percent.

“If 40 percent is bad, why is she proposing 117 percent?” Welch asked. “It’s sort of like Jane Goodall going home and kicking her dog.”

Brad Shannon: 360-753-1688 bshannon@theolympian.com www.theolympian.com/politicsblog

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