Michigan House Reforms Legislators’ Pension Plan

Published February 26, 2010

The Michigan House of Representatives recently passed a bill to stop covering retirement health care benefits for future legislators age 55 and older, a measure seen as symbolic burden-sharing by the legislature.

Current Michigan lawmakers and their spouses with at least six years of service are eligible to join the Legislative Retirement System. The bill, passed February 2, removes the eligibility for legislators elected in November of 2010.

‘It’s Largely Symbolic’

The bill, sponsored by state Rep. Dian Slavens (D-Canton Township), is now under consideration in the Senate, which has blocked efforts to include current lawmakers in the exclusion.

Jack McHugh, the Michigan-based Mackinac Center for Public Policy’s senior legislative analyst, thinks the bill is largely an example of political gamesmanship.

“There’s been a little bit of gameplaying going on for several years, where there’s no real controversy about this thing, but bills get introduced every session, some of which have eliminated health care insurance for present lawmakers, some for future only, and some for present and future, and somehow they never get around to resolving the difference,” McHugh said.

McHugh says although legislators could not agree on how far to go in the past and thus the bills failed, if the current measure comes to a vote on the Senate floor it will pass.

“There are a few million dollars here, but it’s largely symbolic and low-impact,” McHugh said.

Big Spending Gap

Michigan Governor Jennifer Granholm (D) recently proposed increasing the state employee health insurance contribution, while Senate Republicans have proposed deeper cuts in employee benefits and pay. McHugh reports the governor claims her proposal will save roughly a half billion dollars annually. The Republicans say their plan will save approximately $2 billion. 

“The reality is that Michigan is looking at somewhere around a $1.5 billion gap between desired spending and expected revenue, and both parties have proposed reforms that mean reductions in government employee benefits,” McHugh said.

Joel Noble, director of health care policy at Health Care Sharing Ministries in Illinois, is glad legislators are at least paying attention to the issue.

“It’s kind of surprising for Michigan to do this, and it could take a while for other states to follow suit. It sends a message even if the savings from this step are relatively small,” Noble said.

Loren Heal ([email protected]) writes from Neoga, Illinois.