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VT Headlines: School budget builders grapple with insurance hike

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  1. https://www.mynbc5.com/article/school-districts-battle-with-insurance-rate-hike-amid-budget-crafting-season/62741121

    It’s not just insurance rates that raise concern.

    “Over 34,000 educators and retirees use Vermont Educational Health Initiative,…”

    The issue is the difference between ‘defined benefit’ programs and ‘defined contribution’ programs. And it’s not just educators. The current Boeing strike, for example, is all about this same issue.

    Boeing negotiated a change with its International Association of Machinists and Aerospace Workers several years ago, from its previous ‘defined benefit’ program, in which Boeing guaranteed a level of benefits, to a ‘defined contribution’ program, in which Boeing guaranteed a level of financial contribution to each employee’s premium payment.

    The difference is that while the premium payment is guaranteed to be a defined amount, it no longer guarantees that the insurance companies will provide the same level of insurance coverage for that premium. It places the responsibility to choose the insurance company that best meets the needs of the employee on the employee. The employee can take his or her guaranteed payment and purchase the coverage they choose. If they want more coverage, they pay a higher premium.

    Again, Boeing guarantees the contribution amount to the employee’s premium payment. The company does not guarantee that the insurance company won’t raise its premiums for the same level of coverage.

    And now the union wants to claw back the previous deal… the defined benefit guarantee.

    Vermont’s educators are in the same boat. But currently, they have the ‘guaranteed benefit’. As insurance rates increase, Vermont taxpayers are on the hook for those rate increases. And Vermont taxpayers have no say as to what insurance companies the unions choose. As it is, they have what we commonly call ‘Cadillac’ coverage, no matter what the cost to taxpayers. The liability to taxpayers is infinitely high. It’s not sustainable. And ultimately, as taxpayers go bankrupt, so too will the union employees who rely on them. The unions are, in effect, killing the proverbial goose that laid the golden egg.

    In the final analysis, the unions will lose too. But not until they bankrupt the rest of us.