No question about it, healthcare costs are killing the budgets of both public and private employers. This is a national problem, and soon the Supreme Court will weigh in on the federal government’s role in healthcare reform. At the local level, healthcare costs may be one of the most complex issues facing Milwaukee Public Schools and places the district in a no-win situation.
In the 1980s, teachers and administrators traded for early retirement at age 55 with the district’s right to require that all MPS employees live in the district. At the time, this trade was a clear win for the district. It protected the city’s tax base, and early retirement actually saved MPS money. Healthcare costs and early retirement bonuses did cost less than the greater savings that MPS realized by hiring newer teachers at much lower wages.
But healthcare costs began to rise. Trading older educators at higher wages for younger educators at lower wages lost its advantage because the healthcare costs of retirees ate up most of the savings in wages.
In the short term, MPS is in trouble. But the system is simply left alone, it is partly self correcting. That is because MPS employees actually have to retire from MPS if they are to take advantage of retiree health insurance. And fewer and fewer MPS employees stay in the district to retirement.
MPS still has a large number of employees that will reach retirement age in the next few years. After that, the number of lifelong employees may drop dramatically. So, in the long run, there is less to worry about, although having a continual turnover of educators isn’t the best idea educationally.
Can MPS hold out until existing and future retirees pass on to the afterlife? I know it sounds a little morbid, but I’m one of those MPS retirees, and I do hope to have a few more years left in me.
You might think that the recent state law requiring public employees to pay part of their health insurance and pension contribution would correct the problem. In the short term; however, it makes everything worse.
That is because we now have MPS employees rushing into retirement for fear that they may lose these retirement benefits if they wait too long to retire. Once they are retired, Wisconsin law states that these benefits are property rights and can not be taken away. Employees who are near retirement may have a good argument in court that they also are somewhat vested in the health insurance retirement system since they gave up wages in the past for these benefits. So MPS will be paying health insurance for a larger pool of retirees along with the cost of new employees. Instead of paying less for insurance, MPS may wind up paying more in the short term.
All this brings us back to the question of what this nation does about healthcare. No matter where you stand on the federal government’s health insurance reforms now before the Supreme Court, doing nothing is not much of an option. All employers, public and private, pay for the uninsured through health insurance provided to their employees because health providers pass on the costs of those who do not have insurance to those of us that do. Something must be done to control costs and create greater efficiencies. Just having employees pay for a greater proportion of the healthcare costs solves nothing.
