Luzerne County Manager Robert Lawton has publicly dropped a triple whammy on the workforce, proposing higher health insurance copayments and contributions and the first deductible in county history.
The plan, which would close $1.5 million of next year’s $2.4 million budget gap, came as a surprising blow to workers accustomed to absorbing health care changes in small increments.
For example, prior commissioners started converting the workforce to 10-percent health contributions a decade ago beginning with non-union workers, and four unions still have employees paying flat monthly rates instead of a percentage. Those who are paying 10 percent haven’t had an increase in contributions since 2008, officials say.
“Workers were shocked by the extent of what they’re proposing, and many don’t feel there’s any way they could afford all three of those concessions in one shot,” said Paula Schnelly, who represents hundreds of workers in the American Federation of State, County and Municipal Employees, or AFSCME, union.
Probation officer Charles Majikes said the administration is asking his unionized probation and domestic relations support officers to make the unusual move of reopening a contract that doesn’t expire until the end of next year and voluntarily agreeing to concessions.
In addition to increased copayments and new deductibles, the union’s members would have to permanently give up flat monthly payments toward health insurance for a percentage to meet Lawton’s request — presumably with no guarantees their sacrifice would prevent layoffs now or this time next year, he said.
“People are not going to say yes to anything until they know their job is secure,” Majikes said. “We are more than open to negotiating, but once we agree to a health care concession, we’re locked into it permanently. This is not a one-time deal.”
An estimated 217 layoffs would be needed next year without an 8-percent tax hike and closing of the $2.4 million gap, and workers won’t know the status of the tax increase until council adopts the 2014 budget on Dec. 10.
Tom Borum, of the LIUNA Public Service Employees’ Union Local 1310, declined to discuss the health care proposal because he’s in the midst of negotiating a new contract for county prison employees, but he said his workers already tried to give up something to no avail.
The county rejected the union’s unprecedented offer to permanently forego 3-percent raises in 2012 to save $500,000 annually in exchange for no layoffs, but county officials backed away due to a concern about the conditions.
“Quite honestly, we took it as a shot-down. They asked for help and we responded, and they told us no,” Borum said.
Majikes said the county also failed to act on his union’s offer of $300,000 in concessions to prevent layoffs earlier this year.
Lawton is proposing a $500 deductible for up to two people in each plan.
For a family plan, that would mean two insured participants must each pay $500 in medical expenses out-of-pocket before insurance picks up the tab, officials say. Primary care and specialist office visits and some other basic services would be covered regardless of whether or not the deductible has been paid.
The copayment would increase from $10 to $25 for primary-care physician and specialist office visits and from $50 to $100 for non-admittance emergency room visits, Lawton told council.
The 10-percent contribution paid by non-union and many unionized workers would increase from $526.50 to an estimated $900 for single coverage and from $1,286 to $2,400 for family coverage to keep pace with rising insurance costs, Lawton said.
County officials can impose all three health care changes on the roughly 300 non-union employees at any time, and many of these workers are privately grumbling because they haven’t received pay raises in seven years with the exception of a few who were reclassified or promoted.
The administration may attempt to increase contributions for union workers at 10 percent if unions don’t accept Lawton’s request because only one union contract contains a cap on the 10-percent amount, officials say.
Assistant public defenders/district attorneys capped the 10-percent payment at $598 per year for single and $1,300 for family coverage. Their contract expires at the end of the year and is now in negotiation.
Union leaders say they can’t bring any of Lawton’s proposals to their workers for a vote until he presents the details in writing, and they say they haven’t met with him to discuss budget-related concessions in several weeks.
County Administrative Services Division Head David Parsnik, who oversees human resources, said the administration is still reviewing and requesting the rates it pays for specific treatments and services and should have a final proposal by the Dec. 2 council budget work session that will then be presented to unions.
The county pays the cost of medical treatment for employees because it is self-insured, and county officials say this option costs less than purchasing health coverage from an outside insurer.
The county is expected to hit its $15.1 million budget allocation for health care in 2013 and has been advised to allocate $20 million next year based on claims history and inflation, Lawton said. He said he is taking a risk by allocating $17.7 million next year because the budget can’t absorb the full recommended increase.
Employees get paid every two weeks, and those at 10-percent contributions would pay $14 more per pay for single and $43 more for family coverage under Lawton’s proposal.
Workers in AFSCME’s court-appointed support union would have to willingly reopen their unexpired contract and switch from flat rates to 10-percent payments that would increase their per-pay contributions by $21 for single and $58 for family on top of the out-of-pocket deductibles.
The $500 deductible is the most worrisome to workers, she said.
“A lot of workers told me they could tolerate higher copays and premiums, but it’s the deductible that would really hurt,” Schnelly said.
Five union workers, who spoke on the condition of anonymity, said they would voluntarily agree to all three health care sacrifices if they received some reassurances they’d still have jobs.
“We don’t want to make such a huge concession, only to have the same problem of threatened mass layoffs next year. This can’t be a one-year fix,” one worker said.
Another said, “I’m willing to pay this if it means I will save my job.”
County Councilman Rick Morelli said he doesn’t believe county officials can make such a promise because the administration and council are still trying to determine the “magic number” of staffing and spending required to effectively and efficiently provide mandated services largely funded by tax dollars.
No easy choices
Morelli said one employee approached him after Tuesday’s budget session saying raising taxes is his only choice.
“Then I’m out in the community and have people approaching me and emailing me saying I can’t raise taxes at all. It’s a tough job,” he said.
Councilwoman Linda McClosky Houck said it is “unprecedented” for union workers to consider reopening their contracts for concessions or to discuss specific concessions when their entire expiring contracts are supposed to be in negotiation as a complete package.
“If we were not truly in a crisis situation, you wouldn’t be seeing that from employees. That should send a message to the public that we are in a serious crisis, and the only way we’re going to get out of it is everybody pulling together,” she said.