Collective Bargaining and District Costs for Teacher Health Insurance: An Examination of the Data from the BLS and Wisconsin

Source: Robert M. Costrell, Journal of School Choice, Vol. 9 no. 4, 2015

From the abstract:
District costs for teachers’ health insurance are, on average, higher than employer costs for private-sector professionals. How much of this is attributable to collective bargaining? This paper examines the question using data from the National Compensation Survey (NCS) of the Bureau of Labor Statistics (BLS) and the state of Wisconsin. In addition, the impact of collective bargaining on employer costs is decomposed into the impact on total premiums and the employer’s share of those premiums.

The BLS data show that unionization is associated with higher total premiums, higher employer costs, and lower employee contributions in both the public and private sectors. This suggests that the high unionization rate among teachers plays a significant role in districts’ higher average cost. Varying strength of teachers unions across states also helps explain the wide variation in district costs. In states with strong unions, such as Wisconsin, prior to 2011, district insurance costs can be very expensive. It is in those states that the opportunities for district cost reduction are most promising. I examine newly available data from Wisconsin to quantify the impact of that state’s 2011 change in collective bargaining law, Act 10. I find a sharp reduction in district costs from lower-cost policies and higher teacher contributions: 13 to 19 percent in the first year after Act 10, and 18 to 23 percent after the second year, relative to projected district costs.