FIRST CONFERENCE REPORT

The Committee of Conference on the matters of difference between the two Houses concerning

Senate Bill No. 7, entitled

A bill to limit a public employer's portion of the cost of health insurance benefits; and to provide for exceptions.

Recommends:

First: That the Senate and House agree to the Substitute of the House as passed by the House, amended to read as follows:

(attached)

Second: That the Senate and House agree to the title of the bill to read as follows:

A bill to limit a public employer's expenditures for employee medical benefit plans; to provide the power and duties of certain state agencies and officials; to provide for exceptions; and to provide for sanctions.

_______________________ ________________________

Mark C. Jansen Tom McMillin

_______________________ ________________________

Patrick Colbeck Joel Johnson

_______________________ ________________________

Coleman Young II Timothy Bledsoe

Conferees for the Senate Conferees for the House

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 7

A bill to limit a public employer's expenditures for employee

medical benefit plans; to provide the power and duties of certain

state agencies and officials; to provide for exceptions; and to

provide for sanctions.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 1. This act shall be known and may be cited as the

"publicly funded health insurance contribution act".

Sec. 2. As used in this act:

(a) "Designated state official" means:

(i) For an election affecting employees and officers in the

judicial branch of state government, the state court administrator.

(ii) For an election affecting senate employees and officers,

the secretary of the senate.

(iii) For an election affecting house of representative

employees and officers, the clerk of the house.

(iv) For an election affecting legislative council employees,

the legislative council.

(v) For an election affecting employees in the state

classified service, the civil service commission.

(vi) For an election affecting executive branch employees who

are not in the state classified service, the state employer.

(b) "Flexible spending account" means a medical expense

flexible spending account in conjunction with a cafeteria plan as

permitted under the federal internal revenue code of 1986.

under section 223 of the internal revenue code of 1986, 26 USC 223.

(d) "Local unit of government" means a city, village,

township, or county, a municipal electric utility system as defined

in section 4 of the Michigan energy employment act of 1976, 1976 PA

448, MCL 460.804, an authority created under chapter VIA of the

aeronautics code of the state of Michigan, 1945 PA 327, MCL 259.108

to 259.125c, or an authority created under 1939 PA 147, MCL 119.51

to 119.62.

(e) "Medical benefit plan" means a plan established and

maintained by a carrier, a voluntary employees' beneficiary

association described in section 501(c)(9) of the internal revenue

code of 1986, 26 USC 501, or by 1 or more public employers, that

provides for the payment of medical benefits, including, but not

limited to, hospital and physician services, prescription drugs,

and related benefits, for public employees or elected public

officials. Medical benefit plan does not include benefits provided

to individuals retired from a public employer.

(f) "Public employer" means this state; a local unit of

government or other political subdivision of this state; any

intergovernmental, metropolitan, or local department, agency, or

authority, or other local political subdivision; a school district,

a public school academy, or an intermediate school district, as

those terms are defined in sections 4 to 6 of the revised school

code, 1976 PA 451, MCL 380.4 to 380.6; a community college or

junior college described in section 7 of article VIII of the state

constitution of 1963; or an institution of higher education

described in section 4 of article VIII of the state constitution of

1963.

Sec. 3. Except as otherwise provided in this act, a public

employer that offers or contributes to a medical benefit plan for

its employees or elected public officials shall pay no more of the

annual costs or illustrative rate and any payments for

reimbursement of co-pays, deductibles, or payments into health

savings accounts, flexible spending accounts, or similar accounts

used for health care costs, than a total amount equal to $5,500.00

times the number of employees with single person coverage,

$11,000.00 times the number of employees with individual and spouse

coverage, plus $15,000.00 times the number of employees with family

coverage, for a medical benefit plan coverage year beginning on or

after January 1, 2012. A public employer may allocate its payments

for medical benefit plan costs among its employees and elected

public officials as it sees fit. By October 1 of each year after

2011, the state treasurer shall adjust the maximum payment

permitted under this section for each coverage category for medical

benefit plan coverage years beginning the succeeding calendar year,

based on the change in the medical care component of the United

States consumer price index for the most recent 12-month period for

which data are available from the United States department of

labor, bureau of labor statistics.

Sec. 4. (1) By a majority vote of its governing body, a public

employer, excluding this state, may elect to comply with this

section for a medical benefit plan coverage year instead of the

requirements in section 3. The designated state official may elect

to comply with this section instead of section 3 as to medical

benefit plans for state employees and state officers.

(2) For medical benefit plan coverage years beginning on or

after January 1, 2012, a public employer shall pay not more than

80% of the total annual costs of all of the medical benefit plans

it offers or contributes to for its employees and elected public

officials. For purposes of this subsection, total annual costs

includes the premium or illustrative rate of the medical benefit

plan and all employer payments for reimbursement of co-pays,

deductibles, and payments into health savings accounts, flexible

spending accounts, or similar accounts used for health care but

does not include beneficiary-paid copayments, coinsurance,

deductibles, other out-of-pocket expenses, other service-related

fees that are assessed to the coverage beneficiary, or beneficiary

payments into health savings accounts, flexible spending accounts,

or similar accounts used for health care. Each elected public

official who participates in a medical benefit plan offered by a

public employer shall be required to pay 20% or more of the total

annual costs of that plan. The public employer may allocate the

employees' share of total annual costs of the medical benefit plans

among the employees of the public employer as it sees fit.

Sec. 5. (1) If a collective bargaining agreement or other

contract that is inconsistent with sections 3 and 4 is in effect

for a group of employees of a public employer on the effective date

of this act, the requirements of section 3 or 4 do not apply to

that group of employees until the contract expires. A public

employer's expenditures for medical benefit plans under a

collective bargaining agreement or other contract described in this

subsection shall be excluded from calculation of the public

employer's maximum payment under section 4. The requirements of

sections 3 and 4 apply to any extension or renewal of the contract.

(2) A collective bargaining agreement or other contract that

is executed on or after September 15, 2011 shall not include terms

that are inconsistent with the requirements of sections 3 and 4.

Sec. 6. A public employer may deduct the covered employee's or

elected public official's portion of the cost of a medical benefit

plan from compensation due to the covered employee or elected

public official. The employer may condition eligibility for the

medical benefit plan on the employee's or elected public official's

authorizing the public employer to make the deduction.

Sec. 7. (1) The requirements of this act apply to medical

benefit plans of all public employees and elected public officials

to the greatest extent consistent with constitutionally allocated

powers, whether or not a public employee is a member of a

collective bargaining unit.

(2) If a court finds the requirements of section 3 to be

invalid, the expenditure limit in section 4 shall apply to a public

employer that does not exempt itself under section 8, except that

the requirement for a majority vote of the governing body of the

public employer in section 4 shall not apply. If a court finds

section 4 to be invalid, the expenditure limit in section 3 shall

apply to each public employer that does not exempt itself under

section 8.

Sec. 8. (1) By a 2/3 vote of its governing body each year, a

local unit of government may exempt itself from the requirements of

this act for the next succeeding year.

(2) A 2/3 vote of the governing body of the local unit of

government is required to extend an exemption under this section to

a new year.

(3) An exemption under this section is not effective for a

city with a mayor who is both the chief executive and chief

administrator, unless the mayor also approves the exemption.

(4) An exemption under this section is not effective for a

county with a county executive who is both the chief executive and

chief administrator, unless the county executive also approves the

exemption.

Sec. 9. If a public employer fails to comply with this act,

the public employer shall permit the state treasurer to reduce by

10% each economic vitality incentive program payment received under

2011 PA 63 and the department of education shall assess the public

employer a penalty equal to 10% of each payment of any funds for

which the public employer qualifies under the state school aid act

of 1979, 1979 PA 94, MCL 388.1601 to 388.1772, during the period

that the public employer fails to comply with this act. Any

reduction setoff or penalty amounts recovered shall be returned to

the fund from which the reduction is assessed or upon which the

penalty is determined. The department of education may also refer

the penalty collection to the department of treasury for collection

consistent with section 13 of 1941 PA 122, MCL 205.13.