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Township tries to avoid insurance rate hike

December 12, 2012 - After learning that employee health insurance premiums were to rise by 31 percent, Orion Township officials sought to make some decisions to find lower rates.

Current provider, Priority Care HSA, projected the increase. To avoid the rate hike the township began shopping around.

Mike DiLorenzo, the township's benefit consultant, provided some options.

The township's Union Negotiating Committee, made up of Supervisor Chris Barnett and Trustees Neal Porter and Mike Flood, approached their employees with a Blue Cross plan, which would have resulted in a 12.3 percent premium increase.

Both units of the Orion Teamster's union were made aware of the new health care policy suggestions by the committee.

Yet at the Dec. 3 Orion Township Board meeting, the township unanimously decided to keep the current coverage, even though the 31 percent premium increase was to come.

Unfortunately, Barnett said at the board meeting, "we were unable to come to an agreement."

Why didn't the township go with the cheaper option and why did they decide to pass the 31 percent increase to taxpayers instead?

To change the policy, employee contracts stipulate that insurance can be switched but that coverage needs to be identical or as near as can be procured. No policy is identical with another so differences between policies are subject to negotiation and ratification.

As Porter explained, "anytime you take a policy from company A and a policy from company B, they're never identical, they've always got differences. So the union took out all the differences that were negative against them, and they put prices on them. They came up with a bottom line that was almost the same as what the savings was by changing the company."

As he said at the Dec. 3 meeting, the "union was willing to change if we would have given all the savings to them."

What's more, Porter said, "then we would have to go through all the procedures of ratifying the change, and then all the paperwork of instigating the new company. It was just jumping through a whole bunch of hoops and it didn't make any sense when we got through, so we just left it the way it was."

Rather than pass those savings on to the township employees, the board opted to absorb the increase, content to return to negotiations late in 2013 armed with the education this incident afforded them.

Porter took ownership of the failed negotiation. "I take a lot of the responsibility for it. We signed a two year contract with them not knowing what our insurance rates were going to be for the second year. We probably shouldn't have done that. We got stuck and we got caught on this one."

While Porter was willing to take the heat, Clerk Penny Shults placed the blame elsewhere.

"The previous supervisor had this information in October, and the board did not get it until Nov 5," she said.

Porter implied that the Teamster's demands were inconsiderate. "I hope we learned something from it." Township employees wanted to be compensated for what they were to lose, yet Porter said the township "didn't make up any credit for the good things that happened."

Porter said there have been problems in the past with insurance and the Teamsters of Lake Orion. "When they changed from Blue Cross to Priority, they had a fit. They didn't like that. Now we're changing back to Blue Cross, they don't like that."

The township's union steward failed to return repeated calls for comment on this story.

Nonetheless, Porter is satisfied with the current decision, and feels the township employees are well served by their current health care plan.

"The policy that we have that we're providing for these employees is second to none. We have the best insurance program all around now, not just the health care, but across the board

Unless a negotiated alternative arises, Barnett said, things will stay as they are now.

"We have this health care for the next year and I'm going to explore a lot of different options between now and the following year and hopefully we can save the township some money."

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