The Economic Crisis: Health Care Impacts 2009 NCSCBHEP National Conference April 20, 2009 Presenters: Scott Sowulewski, Director of Employee Relations, Michigan State University Maury Koffman, Chairman of Administrative Professional Association at MSU

Location: East Lansing, Michigan About MSU Location: East Lansing, Michigan Institution Size: Over 46,000 Students Faculty: Over 5,000 Support Staff: Over 6,000 Number of Unions: 10

Percent Change in Appropriations

12-Year Increases in Higher Education Budgets by State (FY 1997 to FY 2009) National Average: 67%, or 5.6% per year; Michigan: 17%, or 1.4% per year In FY 1997 NC & MI had basically same appropriation. Since then, NC has invested an additional $2.0 B into Higher Ed. MI invested an additional $300 M.

50 Year Forecast of Health Care Costs

Coalition/MSU Collaborative Approach The parties agree that the cost of the health care plan and the funding available for wage increases are interrelated Employer and Union interests are aligned – both are consumers

Coalition/MSU Collaborative Approach (cont.) Promote health & disease prevention initiatives Agree on “total compensation” cost measures Improve cost & budgeting predictability Align Employee/Union and Employer interests to promote payer and consumer partnership Consider mutual ideas and options to achieve cost savings--Look for incentives to change “behavior” Strong Union interest to avoid “cost shifting”

Coalition Approach to Labor Management Relations Importance of Coalition access to information Strive to keep each other informed--“No Surprises” Importance of education and sharing information All parties be open to all possibilities Based on trust – Trust is fragile Joint effort to solve problems

Wage Increases Tied to Health Care Costs

Measuring Success

Lessons Learned Joint effort in obtaining Administration’s buy-in Importance of Coalition of Labor Organization’s access to information (from University and vendors) Importance of education Allow plenty of time All parties—be open to possibilities

Conclusions Clearly, many factors affect health care costs, making it difficult to isolate the exact impact of any one strategy or combination of strategies Collaborative management-labor approaches can yield effective strategies to slow the growth of health care costs Continued collaboration is an effective strategy to manage growing health care costs while safeguarding the quality of benefits offerings

Questions/Discussion