Message from the Chair - February 2004

Metro Transit health costs must be reined in

Council Chair

Peter Bell

It's no secret that health care costs are soaring out of control. Employers and employees throughout the country are struggling to slow the growth in premiums and maintain insurance coverage that provides adequate care for employees and their dependents.

For Metro Transit, the region's major provider of bus service, the problem is particularly acute. The cost of the current plan covering 2,200 bus drivers, mechanics and clerical workers increased by 18.9 percent for 2004. For 2005, it will rise by a whopping 23.9 percent.

Not surprisingly, the Metropolitan Council has proposed changes in the current health plan - to preserve coverage for our employees while, at the same time, avoiding the need for fare increases and service cuts that would harm transit-dependent riders.

In our negotiations with Amalgamated Transit Union Local 1005, we have asked the union to work with us in designing a new plan that would make coverage more affordable for both the transit system and our employees. It is unfortunate that union leaders have resisted any meaningful change, and instead have threatened a strike.

Health care costs already consume 16 percent of Metro Transit's budget. Left unchecked, this figure will rise to 27 percent by 2010. The present ATU health care plan simply is no longer affordable.

The single health plan now covering ATU employees provides them with 100 percent coverage for most medical services, with no deductible and few co-pays. It provides employees with few financial incentives to choose care wisely and help slow the growth in premiums.

Under the contract proposed by the Council, employees could choose single or family coverage from among three health care plans with varying co-pays and deductibles - including a plan similar to the one available today. The three health plan options would permit employees to select the plan that best meets their needs and their budgets.

In two of three plans, single employees would continue to pay nothing toward their health care premiums, while the Council would pay $5,056 this year and $6,269 in 2005.

In two of three plans, employees electing family coverage would see their premiums decrease - in one case by $2,807 in 2004 and $4,056 next year.

In our final offer, the Council also is seeking the rein in the skyrocketing cost of retiree health benefits.

Under the current ATU contact, the Council is obligated to pay two-thirds of the cost of health insurance for future retirees with as little as 10 years of service (the requirement is 15 years for employees hired between 1995 and 2000, and 17 years for those hired after 2000).

Metro Transit already has an unfunded liability of $255 million for retiree health benefits, a benefit that most state government and private sector employees simply do not enjoy.

Under our proposal, current employees would need a minimum of 17 years of service to qualify for this lucrative benefit when they retire at age 55 or older. Our proposal would eliminated this benefit for future hires, as many public and private employers already have done.

Finally, we have proposed to increase salaries by 1 percent, effective Aug. 1. While this obviously is a modest adjustment, it is important to recognize that Metro Transit's resources are constrained as a result of the state's budget shortfall and that ATU employees already are well paid - by local and national standards.

The drivers' current top salary of $21.80 per hour ranks second only to Seattle's $22.82 among transit systems in comparable metropolitan areas. And it is $6 to $9 more than the top hourly wages paid by private transit providers in the Twin Cities.

The Council's offer is both fair and fiscally responsible. It would allow Metro Transit to operate within its current resources, without further fare increases or service reductions.

Through the fare increases and service cuts implemented last year, the thousands of Twin Cities area residents who rely upon the bus system for transportation already have done their part to ease Metro Transit's budgetary pressures.

Metro Transit has a well trained and dedicated work force, and its employees enjoy salaries and benefits that are among the most generous of any comparable transit system. But union leaders are asking taxpayers to dig deeper to subsidize a level of benefits that few taxpayers enjoy. That is neither fair nor realistic.

The Metropolitan Council is committed to achieving a responsible new contract that (1) allows Metro Transit to operate within its budget and (2) reins in the runway cost of current health benefits. We owe nothing less to the customers of our system and the taxpayers of our region.

Peter Bell

February 2004

(Originally published in the Star Tribune, February 23, 2004)