LANSING – As all levels of government feel the pinch of fewer revenues, all could benefit from cutting costs under a single, statewide public sector health care program, House Speaker Andy Dillon (D-Redford Twp.) said Wednesday in announcing his proposal.

Dillon said annual savings of up to $900 million could be reached if every public sector employee and retiree, possibly including universities, were to be covered under a single program.

“With Michigan facing spiraling deficits and massive unemployment, reforming health care for public employees has never been more urgent,” he said. “For too long, Michigan has wasted precious tax dollars on an inefficient patchwork of thousands of separate, widely varying health care plans for its public sector employees and retirees. This drains state resources essential for our economic recovery, threatens the jobs of police and firefighters and takes away funding from teachers and classrooms. We have got to change if we want our state to move into the 21st Century.”

While Dillon said he didn’t know what the benefit plan for public employees would look like, an analysis of his proposal shows that even with the recent health care premium increases for state employees, public workers still pay 9 percentage points less than their counterparts do on premiums in other states.

According to the proposal, the health care program would be matched against the benefits received by other public sector employees in other states, as well as those in the private sector.

And most of the savings in the plan, $400-$600 million, would be found through the standardization of health care plans for public sector employees and retirees.

Dillon said it was possible some public employees would have to pay more for their health care, but he wants a sliding scale of how much more an employee would have to pony up to based on their salary.

Initial reaction to the proposal ranged from cautious to the Michigan Education Association calling it a “bureaucratic nightmare.”

Dillon did find an unlikely ally in Michigan Taxpayer Alliance Chair Leon Drolet, who said in a statement that Dillon “should be congratulated for his willingness to confront the sacred cow of government employee benefits.”

Dillon’s office also released a list of five local school officials supporting his plan, including the president-elect of the Michigan Association of School Administrators’ executive board.

William Mayes, executive director of MASA, said the group strongly supports the proposal’s concept. Mayes said the organization has been looking for some time for long-term solutions to the budget as it’s unlikely the state will create new dollars for programs.

Having a statewide pooling and bidding program for health care would provide for a redirection of the available dollars, he said.

Education Action Group also backs the plan, saying in a statement, “In our work across the state of Michigan, health insurance – and particularly MESSA – is the number one issue at the public school bargaining table. It’s what holds up teacher contract agreements and spurs nasty community fights. The direction Dillon is heading could relieve a lot of that pressure, and save significant resources for teacher raises, textbooks, or computers.”

Governor Jennifer Granholm, through her press secretary, seemed cautious of the initiative, saying, “We’ve got to look at any and all proposals that could help lower the cost of government in Michigan without sacrificing the things that matter most to us including quality health care for public employees. But what we can’t afford to do is to let the theoretical savings of any proposal prevent us from making tough choices about spending and revenues in our budget. We’ve also got to make sure that any major changes with health care in Michigan don’t diminish our ability to lower costs and expand coverage here through the national health care proposal moving through Congress.”

A spokesperson for Senate Majority Leader Mike Bishop (R-Rochester) was also cautious in assessing the proposal. Matt Marsden said Mr. Dillon’s plan “seems ambitious,” but given the national debate on health care it may not be prudent for the state to take on such an overhaul at this time.

Doug Pratt, director of communications for the MEA, put it this way, “Why on Earth would anyone believe the state could run anything efficiently when it can’t even pass a balanced budget? Why would public school employees trust the health of their families to a state bureaucracy in Lansing?”

He argued school employees already have taken on a greater share of health care costs through higher premiums and lowered benefits.

Unions have long argued that public employees have been willing to take lower pay in order to protect their health care benefits, but in recent years with continuing budget shortfalls most have been forced to take on a greater share of their health care costs.

Cheryl Streberger, benefits representative for the UAW Local 6000, which represents state employees, said it was difficult to react to Mr. Dillon’s proposal with few details on what the coverage would be compared to what employees now receive or who the provider would be.

Streberger also questioned the timing of the proposal given the ongoing debate in Washington, D.C. over a national health care plan.

Dillon told reporters that as the state faces a $1.7 billion deficit in the upcoming fiscal year, he will be proposing several measures to reform state government for the long-term.

He expressed doubt that there are the votes in the House to cut the essential services that are proposed for the chopping block and he added that lawmakers would have no credibility on a movement to overhaul the state’s tax structure without meaningful government reforms.

Dillon said the proposal does not do away with collective bargaining, as the plan would be negotiated with the Office of State Employer, and while there is a local control debate to be had, municipalities and schools will save money under the plan to keep teachers in the classroom and cops on the streets.

And he said the proposal could work with what House Democrats have introduced in terms of dealing with individual health care market reforms and what’s going on with the national debate on health care.

Dillon, who provided information to his caucus on the plan during Wednesday’s session, said members were willing to look at his proposal although he said some may not ever back it.

He said the bills implementing his plan would not be introduced for some time in order to give stakeholders a chance to debate it and provide for alterations.

One of the areas still in question would be whether public universities would be part of the health care program. Universities are given autonomy under the state Constitution but Dillon’s plan calls for all public sector employees to be apart of the program. Mr. Dillon said that issue could be debated as the measure moves forward.

One group that would not have to participate in the health care program would be entities with health care costs below whatever state plan eventually surfaces.

Below is a more in-depth breakdown of how the plan would work. More information on the plan will be available Friday at NewIdeasForMichigan.org.

The governor would appoint a director that would design and implement a plan for the uniform public sector health care program. The “vision” for the plan would have to be completed by September 30, with an action plan adopted a month later. Approvals for the plan would be completed by December 31 with the program taking effect January 2010.

The benefits would be similar to those available to private sector workers and consistent with what other public sector employees in other states receive, subject to a means testing on income.

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