Teachers Are Not Causing Health Care Costs To Skyrocket

It's been a good long while since we've played Spot The Pattern™. Ready (all emphases mine)?

Jersey City, NJ:

Mackay is one of the thousands of teachers on one side of a six-month (and counting) contract battle with the 29,000-student public-school district. The teachers have worked under an expired contract since the start of the school year and negotiations have stalled over whether teachers should pay less toward their health care expenses. The teachers call it "Chapter 78 relief."

Chapter 78 is the 2011 law that revamped how New Jersey's public workers pay for their health benefits. It required school employees to pay a portion of premiums, with amounts rising over a four-year period. In Jersey City, that period has ended, so teachers can now ask the school district to shoulder more of the cost. 

The dispute has statewide implications. If the teachers union, the Jersey City Education Association, scores a victory in Jersey City, other districts could follow.

COSTS SOAR

The district's costs for employee health benefits for the 2017-18 school year is $98.9 million. The district's total budget is $682 million.

Since 2011, the amount teachers pay for their benefits has risen nearly 400 percent. For the 2010-11 school year, the amount was $4.2 million. This year, teachers pay $19.9 million. In that same time period the district's share rose from $55.6 million to $79 million.

Los Angeles, CA:

Despite parents’ pleas to deal now with a coming deficit that could require huge cuts, a narrow majority of LA Unified’s school board on Tuesday approved a new contract that commits the district to paying for its employees’ generous health benefits at current levels for the next three years.

The contract passed 4-2, with board members Nick Melvoin and Ref Rodriguez casting no votes. The eight labor unions covered by the contract — representing 60,000 employees — must also approve the deal. United Teachers Los Angeles held their vote last week, but no results will be announced until all unions have voted.

“It’s not the fault of our employees, but we need to secure more funding and also need to start living within our means,” said Melvoin, who said he was haunted by a chart presented at a meeting last fall about the spiraling healthcare costs and showed that by 2030 more than half of the district’s budget will go toward health benefits. “This deal is a baby step in the right direction, but we’re in a dire financial situation that requires at least an adult step.”

[...]

In the deal, the district agreed to continue to pay $1.1 billion per year for health and welfare benefits, which will save the district $190 million over the three years of the contract. In return, the unions will allow a reserve fund that now totals nearly $300 million to cover any increases in costs. Healthcare costs have been rising about 6 percent a year, and in the past the district has covered those increases.

West Virginia:

CHARLESTON, W.Va. — West Virginia public school teachers launched a statewide walkout Thursday that canceled classes in all 55 counties, protesting over pay hikes signed by the governor hours earlier that the teachers say don’t go far enough. 

Thousands of teachers and support staff converged at the gold domed Capitol in Charleston on Thursday, seeking to pressure lawmakers who are still considering other proposals for them. It was their first statewide strike since 1990 in West Virginia, where teacher pay ranks 48th in the nation.
The walkout is scheduled for two days, and teachers say they’re willing to go longer if need be. 

Chants of “Do your job so I can do mine” reverberated throughout the Capitol halls, along with other slogans including “55 strong” – a reference to the state’s 55 counties. 

Gov. Jim Justice on Wednesday night signed a 2 percent raise next year for teachers, followed by 1 percent raises the following two years. But teachers say the increases are too stingy. They also complain about projected increases in health insurance costs.

[...] 

Health insurances costs also remained a big sticking point. The Public Employees Insurance Agency, or PEIA, has agreed to freeze health insurance premiums and rates for the next fiscal year for teachers and other workers. The House passed legislation to transfer $29 million from the rainy day fund to freeze those rates, a move that awaits state Senate action.

Ted Cheatham, director of that agency, has said that because of medical inflation, about $50 million to $70 million would be needed annually to keep the program functioning as it currently does.

I could probably go on, but you get the point: teacher health care costs are driving up the costs of public schooling, and that's putting fiscal pressure on taxpayers.

However, the debate around the nation always seems to be about how much more teachers, and all public employees, should contribute to their health benefits -- but not about how to get the costs of those benefits down.

Before I get further into this, let's review what we know:

1) There is little empirical evidence that suggests public employees are overpaid. Sure, there's plenty of right-wing, think-tanky stuff out there that suggests public employees are rolling in it. But the methodology for much of it is questionable. High-quality research suggests, instead, that there is a  small but substantial penalty paid for having a career in public service.

2) There is a good bit of evidence that suggests there is a compensation penalty for teachers -- and it's not made up by pensions or health care benefits. As this debate -- Jason Richwine and Andrew Biggs vs. Lawrence Michel and Joydeep Roy -- shows, the only way to make an empirical case that teachers are overpaid is to engage in variable cherry-picking while making your statistical models, overstretch the length of the summer furlough (it's not "summer vacation" -- it's a mandatory, unpaid leave), and assume teachers who leave teaching are the same as teachers who stay. 

Better methods show a clear teacher pay penalty:

The teacher pay penalty is bigger than ever. In 2015, public school teachers’ weekly wages were 17.0 percent lower than those of comparable workers—compared with just 1.8 percent lower in 1994. This erosion of relative teacher wages has fallen more heavily on experienced teachers than on entry-level teachers. Importantly, collective bargaining can help to abate this teacher wage penalty. Some of the increase in the teacher wage penalty may be attributed to a trade-off between wages and benefits. Even so, teachers’ compensation (wages plus benefits) was 11.1 percent lower than that of comparable workers in 2015.

Here in New Jersey -- often cited as a state that is generous to teachers -- there is a clear compensation gap with similar workers in other fields. The notion that pension benefits make up for this gap is undermined by the fact that this state has one of the least generous retirement benefit packages in the country. In addition, New Jersey public worker health insurance is, depending on the particulars, less generous than insurance for similar workers in the private sector.

The history of New Jersey's public workers getting screwed on pay and benefits is not unique. There is, of course, an entire "research" infrastructure set up to convince Americans that public worker pay is out of control -- much like there are "scientists" who claim global warming is a hoax. If you choose to believe them, you're probably also going to deny the facts about the following...

3) Compared to the rest of the world, the United States way overpays for health care. Here are some quick graphs I made based on OECD data.

As a percentage of the economy, we are spending way more than other countries on health care.

And in real dollar terms, we are spending way more than other countries on health care.

4) Our health outcomes are not that great. Yes, there are factors that go into things like life expectancy other than the effectiveness of our health care system. But for the amount we are spending, you'd think we'd be doing better than this:

The logical conclusion here is that the US is way overpaying for health care for everyone, including teachers and other public employees. For a while, we made up for the teacher pay gap by giving them comparatively good health benefits. But the costs have become so high that we can't afford to do that anymore.

So how do we solve this? Demand even more money from public employees for mediocre care? That doesn't solve the core problem: health care costs are way higher than they should be. Pretending that teachers are overpaid, in spite of all the evidence that says they aren't, just distracts us from coming up with a real solution.

If we could get all public employees into a plan that was similar to the plans of many other developed nations, we could probably save taxpayers a lot of money, and provide health care at least as good, and maybe even better, than what we are currently providing to public employees. Wouldn't that be a good thing? Shouldn't that be our focus first, rather than trying to get even more money out of public employees for a health care system everyone knows is too damn expensive?

Now, when someone like me brings all this up, the typical response is something along these lines: OK, everyone agrees we could do much better, but we can't solve this problem right away. We need to get teachers and other public employees to pay much more right now, and then eventually we can move to a better system...

It's similar to the response you get from education "reformers" when discussing childhood poverty: Yes, we need to fix that, but we can't wait! So let's have more charter schools/test-based teacher evaluation/merit pay/whatever right now, and then eventually we can move to a better system...

In both cases, we're assuming that the real problems are so big and so intractable that we can't just choose to fix them. The best we can hope for is to continue along with the same, failing policies we have now, at the expense of people who are hardly at the top of the economic food chain.

So we fault teachers -- teachers! -- for having health insurance that's too cheap and too good. And the real problems with our health care system never get fixed.

Health care doesn't have to cost so much more in America as in other places. We, as a country, choose to pay much more than we should. We could choose to move to another system -- even just for public employees. But we don't, because we choose to have a government more responsive to the desires of corporate interests than to the needs of government employees or best interests of middle class taxpayers.

Again: it's not like teachers and public employees have been raking in the bucks, and it's not like we haven't been paying more and more into our health benefit packages while getting less and less. So, before we start demanding even more from teachers and other public workers, let's start putting some real effort into containing the exploding costs of health care.

It would be better for almost everyone if we did.