Wednesday, December 13, 2017
A December Evergreen
‘Tis the season for evergreens, so I thought I’d bring out this one. It’s from last year, but with a few details changed, it’s just as true today. To update it, just replace every reference to “ten percent” with this year’s figure of “thirteen percent.”
Brookdale recently ratified a contract with its faculty union, after a bit of a bumpy ride. I was on the management negotiating team, so I had a front-row seat for most of the process.
I can’t disclose anything confidential, but I don’t need to. Here’s what it boiled down to:
Union: Health insurance is eating our raises!
Mgmt: Health insurance is eating our budget!
Insurance Company (in the corner): Nom nom nom nom (burp) nom nom nom (chair collapses) nom nom nom
The bulk of the conflict was over how to divide the rapid increases in the cost of health insurance. The rest of it was relatively straightforward.
I suspect we’re not alone in this.
The catastrophic cost -- and rate of increase -- of health insurance is the 800 pound gorilla of higher ed finance. It’s the primary driver behind adjunctification. It’s increasing faster than any of our revenue sources, and it seems to be picking up steam. In negotiation sessions, it’s the sun around which every other issue orbits.
(For those keeping score at home, that makes it a nuclear fusion powered 800 pound gorilla that knows how to drive a steam-powered car, and anchors a series of satellites. Scary stuff.)
To make it concrete, we have three major sources of operating funds: the state, the county, and students. State and county funding have been flat for years, and enrollment is dropping. Meanwhile, the cost of health insurance goes up by at least ten percent per year. Do the math, projecting out a few years. It’s not pretty.
Labor negotiations are difficult because one of the parties -- the one getting the best deal -- isn’t at the table. It just jacks up prices, and the rest of us pay them. Internal disputes are over how much of each year’s cost jump is borne by whom. Nobody internal comes out ahead.
Of course, over the long term, unsustainable trends aren’t sustained. This one clearly can’t be.
Our health insurance system, if you want to call it that, was an accident of history. It emerged in its present form as an end run around wage and price controls during World War II. With pay levels frozen, companies that wanted to recruit workers had to find other enticements, so they developed packages of benefits. By the time President Truman (!) got around to proposing national health insurance, the AMA was able to argue that it was largely unnecessary. Add some red-baiting (“socialized medicine!”) and the racial politics of the New Deal coalition, and the end run became the new normal by default.
That’s why literally no other advanced country has anything like it.
Postwar prosperity made the system tenable long enough for it to start to seem natural, but it never really made sense. Now we’re seeing the flaws in the system get so large that they start to deform or consume other sectors of the economy. Prospective entrepreneurs don’t start companies because they can’t afford to pay for their own health insurance. Employers everywhere pay careful attention to maximum hours for part-time status, because the marginal cost of going over is prohibitive. If you don’t believe me, ask your HR office what the monthly premium for COBRA is.
Locally, we managed to piece together a deal that puts off the day of reckoning for a few more years. I’m glad we did -- really, really glad we did -- but the basic underlying trendlines are still there. That’s not something we can solve locally. That requires a national solution. Absent that, I foresee the rides getting bumpier and bumpier until something breaks.
Bumpier and bumpier? Check. January’s increase will cost the college a million dollars. That’s from a total college operating budget of about 78 million. And that’s just health insurance, just the increase, and in just one year. In a time of declining enrollment.
Trees, even evergreens, don’t grow to the sky. Here’s hoping this one stops before it blocks the sunlight for everything else.