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Editorial: State workers can’t afford to accept raises

It’s no wonder a majority of the state employees bargaining over a new union contract voted to send the proposal back to the table for more work. The way the contract is structured, most employees can’t afford to accept the state’s proposed cost-of-living raises, the first since 2009.

For workers with families, any gains received by raises of 1.5 percent next month, 2.25 percent in 2014 and 2.5 percent in 2015 would be more than offset by an increase in health insurance deductibles to $750 per family in 2014, with an additional increase to $1,000 per family in 2015. Only employees in the top labor grades would earn enough to more than cover the cost of the higher deductible. (The math is better for individuals, who would see a $500 deductible increase.)

The problems facing negotiators demonstrates why the link between wages and health-care benefits needs to be severed. The system has become regressive, in some cases horribly so. Since the proposal exempts preventive care, screenings and surgeries done in a physician’s office, only employees with a health problem of their own or a sick or injured family member will pay the deductible.

That means that the proposed system, and countless others like it across the nation, most penalizes those who both earn the least and must also struggle to cope with the cost, heartache and anxiety of accident or disease.

Health insurance as part of employee compensation began with the hiring of company doctors. About a century ago, companies began offering employees health insurance. The provision of health insurance in lieu of raises proliferated during World War II, when the National War Labor Board froze wages. Companies that wanted to compete for workers began doing so by offering better health benefits and they became part of union contracts. In time, because wages are taxed and health care benefits are not, the latter increased.

Wages are subject to payroll taxes, 6.2 percent each from worker and employer. Higher wages also increase employee pension benefits, so for decades it was cheaper for employers to increase benefits rather than worker pay. Workers accepted the deal because benefits, for the most part, aren’t subject to income taxes, which trim the take-home pay of most public workers by 15 to 25 percent.

The rapidly escalating cost of health care changed the equation. It has made providing generous health care coverage for employees much more expensive, in many cases prohibitively so; thus the move by employers to shift more of the cost of health insurance to employees. That shift is often couched as a means to discourage the insured from seeking unnecessary care, but the most comprehensive study of the effect of patient cost-sharing on utilization found that high deductibles reduced necessary and unnecessary care equally. The reduced utilization, as expected, was greatest among those with the smallest incomes.

The state’s proposed contract shifts $1,750 in risk to an employee with a family over the biennium. The increased deductible would come in exchange for a very modest increase in wages – an increase that wouldn’t bring most employees back to 2009 levels in real terms even without counting the deductible increase. The healthy and lucky would win, the ill and unlucky would lose. In general, older workers would lose, and younger and presumably healthy workers win.

That is not the kind of health-care system, or employee compensation system, that state employees or anyone else should have. Someday, Congress will recognize that.

Legacy Comments14

I got from Gen X that he was telling you to check out better insurance companies, shop and compare. I also got that he was geniuniely intrested in looking at info pertaining to what Obama has done. I did not get the impression he was setting me up to trash my links. Some on this forum do that, but I believe he does not.

Your basically saying Gen X that the right cow tow to lobbyists, but it is okay if the left does. That makes no sense. Persident Obama has not just made deals with Big Pharma. He also screwed us over with the deal he made with the auto industry, green companies and others. Do not take my word for it, check out his deals. There are lots of them Look who he has given waivers to in regards to the ACA. Look at his union deals. In order to make a fair argument about anything, look at what both parties have done, not just the party of your choice. But that is how it is today. Your party will tell you what the other party is doing, but will leave out what they are doing. Both sides do it. All pols are corrupt and like the mafia , they have to pay back who did them a favor.

Give me some specific articles you think I should read and I'd be happy to read them. I have read some stuff about the auto bailout (an entire book actually, since I'm a "car guy") and Obama's support for green technology but one person can only read so much. I will read it and let you know what I think. I know that both Dems and Reps are crooked. That's what happens when there's so much money in politics. I just think the Reps are more crooked.

You said here - Give me some specific articles you think I should read...but you told me - Look deeper into this issue (on your own)... Why didn't you give me some specific articles to read? Why is it liberals can never do their own research but expect everyone else to? Please show me facts that Republicans are more crooked than Democrats?

Sunny, I suggested you look into the state of our health care system on your own because I didn't want to put any ideas into your head and wanted you to draw your own conclusions after looking at different sources. If you're asking me for sources, I'd be happy to provide a few: as always, Steven Brill's March 4th 2013 Time Magazine article is a great place to read why health care costs so much; for an eye-opening look at health care from a physician's viewpoint I recommend Dr. Otis Brawley's 'How We Do Harm'; for a look at the health insurance industry from an insider's view read Wendell Potter's 'Deadly Spin'. I only ask that you actually read these books before commenting on them. If you have some other books you think I should know about, let me know. I'm always hungry for more info on this topic. As to why I think Republicans are more crooked than Democrats, there must be 100 books on both sides of the argument. The 'comments' section of a small newspaper is hardly the place for that discussion. We could trade stories of crooked politicians 'till the end of time.

NH teachers raises over the last 15 years have been outrageously above the private sector they should be embarrassed to bring the topic up

I don't believe teachers and their raises have anything at all to do with the state employees' contract. They have their own contracts with their local school districts.

Sunny, I think your anger is misdirected. You should be angry at your insurance company and health care providers for charging you $1400 a month for crappy coverage. Do you ask yourself where all this money goes? Do you ask yourself how people in other countries pay for health care? Are you worried that you (and millions of other Americans) are one accident away from losing everything you've worked for all your life? Look deeper into this issue (on your own) and you'll find that there is a better way to provide health care.

I would love to get a $750 deductible plan for the whole family for the rate that a state employee pays out of their check. Mine is $600 right now but due to Obamacare it will be going to $1200 deductible next year. The family plan will go from $455 per month for the premium out of employees checks to over $625, far, far more that what the state employees now pay and a far cry from the proposed new plan versus a pay raise. However, let's be clear, the need to do this is not related to escalating health care costs, they have been rising for years but under Obamacare, all of us have to chip in to give a few people the same coverage we have. We will wait in line with them or perhaps behind them, have longer wait times, may not be able to keep our doctor and will pay more. Yet, somehow, state employees should not pay any more? My guess is that 99% of the public sector workers in this state supported Obamacare and like Congress and their staffers, they want a pass. I say NO, let a lesson be taught here.......that lesson is that you may have taken the easy path in life but there are no free perks or rides when you are a public servant.

The thing about being able to post anonymously is that people can reveal how they really feel. So, state workers "took the easy path in life"?It had nothing to do with making a conscious decision to give up pay in exchange for health care benefits? .........."No free perks or rides when you are a public servant"--I'm OK with that. But what about the freebies government bestows on private corporations? The tax breaks built into our tax code to benefit this special interest or that; the Medicare Part D drug benefit written specifically to forbid the US government from negotiating with drug makers ensuring a mother-load of cash for big pharma, for instance. There is no shortage of corporations trying to elbow their way into feeding from the federal trough (i.e. our tax dollars). Never a mention of that, Itsa?

That is what pols do, they make deals with the lobbyists. Gen X, I suggest you check out the deal that President Obama made with big pharma to get them to get behind the ACA. Big Pharma spent a lot of money on ads to promote the ACA. And they did not do that out of the goodness of their heart. As far as state workers go and what they deem they should be required to pay towards their benefits, what is missing in the discussion is that they are asking tax payers who are struggling to come up with more money when the taxpayers do not have it. We feel their pain also in regards to no raises etc. Many of us are in the same boat, and many of us have been faced with paying more for insurance for crappier plans, when we once had better plans. So as a result, the state workers are giving themselves a picture to the taxpayers that they believe they should not be in the same boat as those who employ them. That attitude is what folks deem greedy, and it is why the state workers are ruining their cause with the taxpayers.

I know about the distasteful deals Obama made with insurance companies and pharma. I don't like it but I understand why he did it. The ACA is such a weak, watered-down attempt at health care reform and look how incredibly difficult it is to get it through politically. We are going to see health care take a bigger and bigger portion of our paychecks (retirees aren't spared either, BTW) and the issue will continue to fester for many years until people come to their senses and see there is no other way but single-payer. The question is not if, it's when.

Maybe the State should drop the Health Insurance benefit completely. Let’s see how many State Workers will find that buying their own Health Insurance out-of-pocket will get them a better deal. We recently lost our Heath Care Insurance and it was going to cost us $1400 a month, let me repeat that $1400 a month, for just two of us, and that is with a considerable deductible. I would gladly pay an extra $1750 over the biennium to get what these Workers get, no questions asked! Let me ask both the State Workers who don’t seem to want to pay their fair share and the Monitor Staff, if you’re sick, what is the financial limit you would put on your health? Is it $1750?

I am all for that. Give them each $8000 extra in their paycheck and have them spend it on a health exchange plan. The issue is that before Obamacare those without insurance had emergency rooms and most paid nothing. Yes, the argument was that we all paid more and part of their costs in higher charges. Well, if that was true then why now will we all be paying even more???

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