Our View: Health benefit adjustment benefits workers and taxpayers

The Daily Advance

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Americans may differ on many issues of national import, but just about everyone agrees that medical care and health insurance costs are putting more pressure on individual and family finances. For most people, the options for retaining medical insurance — either individual or company plans — equate to paying more in premiums, accepting higher co-pays and deductibles or reducing benefits.

For the time being, that’s the world most of us live in, which raises the question of whether the health care insurance benefit that Elizabeth City employees now enjoy could better reflect what is going on across the state and nation.

The matter surfaced recently during budget discussions that included having to plan for a hefty health insurance rate increase for city workers. Looking ahead to the implications of possibly more rate hikes in the future and more pressure on city finances, a prudent calculation would be to minimize the effect on everyone. Accordingly, an accommodation from employees has to be considered.

Some on City Council, however, would prefer to insulate employees from higher medical and insurance premium costs. They’d prefer that taxpayers continue to absorb all of the costs for city employees’ premiums, a policy that has been in place for as long as the city offered medical insurance through its carrier, the North Carolina League of Municipalities.

The subject of changing that formula and asking city employees to contribute to their medical insurance costs was broached by City Manager Rich Olson as a means of continuing coverage for the city’s 254 employees while funding a $414,614 hike in premiums next year.

Olson recommended that employees chip in $25 every two weeks or $650 a year. That would generate $171,000 toward the increase. A savings realized from a reduction in workers compensation insurance would free up another $130,000 toward reducing the premium increase. The taxpayers, Olson said, could pick up the remaining $113,000, thus equitably spreading the burden of the added costs.

But some councilors believe city employees shouldn’t have to pay anything, even though the reason for the increase from NCLM is the result of higher medical expenses — 24 percent higher than premiums paid — chalked up by city workers. Even six-term Councilwoman Anita Hummer interprets the small premium contribution as a pay cut. “It is a salary cut, and it’s going to hurt a lot,” she said.

Other councilors, Michael Brooks, Johnnie Walton and Kem Spence also weighed in to protect city workers from having to pay any part of the insurance premiums, a benefit, they believe, goes with holding a city job.

As much as free health insurance is a grand idea, it’s become unrealistic for most Americans in the current medical environment. Aside from the fact that most private sector businesses are and have been sharing medical insurance costs with employees for decades, the city also must be mindful of how these rising costs are affecting budget decisions and the very soundness of the city’s fiscal future.

The trend toward rising health and pension costs has had a sobering impact on municipal leaders nationwide in recent years. The institutional debt driven by those costs have accelerated budget problems and resulted in bankruptcy in some cities and towns. Hence, what Olson and other city staff are doing — wisely we believe — is looking out for the future fiscal integrity of Elizabeth City, its workers and local taxpayers.

What should concern council is not only the impact on city employees but that rising medical expenses — and the effect they have on insurance premiums for employees and retirees — is creating an unsustainable long-term scenario for the city.

By considering reasonably tolerable adjustments now, the city can begin to get control of these costs and their impact on city finances — rather than wait until the entire ship of employee benefits sinks in a sea of red ink, leaving all employees and retirees on their own.

Given the option of sharing a small portion of their health care costs now to guarantee that the benefit is viable and available when it’s needed later on would seem like the wiser choice for employees than risking a much worse outcome down the road.

Comments

Too many retirement plans

Don't forget city employees enjoy a defined pension plan retirement, as well as a 401k that the City pays as a percentage of their annual salary without a required employee match. I know of no other employer anywhere that has such a generous benefit package. This is all paid for by the Elizabeth City taxpayers, many on fixed incomes who have not seen a raise in years, but have seen substantial increases in taxes. What does it take to be competitive? Have city employees been leaving the city due to lack of adequate compensation? I don't think so. Have taxpayers been moving out of the city because exorbitant taxes? I think we all know the answer to that one.

Medical Insurance

City councilors should also be concerned about rising cost to taxpayers. The public taxpayers, many of whom receive no Christmas bonus, have to pay for that for city workers. The public taxpayers, a lot of whom have no 401K, are having to pay for that for city workers. Throw in health insurance and you have well a compensated benefit package. It appears some councilors are acting as union representatives for city workers rather taxpayer elected representatives. Take the Christmas bonus and the 401k money from everybody and use that for the insurance.

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