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  • Collective Bargaining and Competitive Costs: The Case of WEA Trust

    Everyone knows that competition keeps prices down. However, collective bargaining eliminates competition, and downward pressure on costs, by giving government unions a monopoly. It forces voters’ elected representatives to employ workers on terms the union accepts. With collective bargaining the government cannot shop around to get taxpayers a better deal.

    Unsurprisingly, giving government unions this monopoly tends to make government more expensive – and not just through higher wages and benefits. Nowhere is this on better display than in Wisconsin.

    The Wisconsin Education Association Council (WEAC), the state’s education union, created their own company to provide health insurance – WEA Trust. Through its powers as Wisconsin teacher’s only bargaining representative, WEAC insists that school districts to buy health coverage from their trust. Usually they get their way. Fully 64 percent of Wisconsin school districts use WEA Trust.

    This is great for WEA Trust – but not for the Wisconsinites whose taxes pay for it. Since the WEA shelters WEA Trust from competition it has less incentive to offer competitive rates. WEA Trust charges higher premiums than competing carriers for similar health insurance policies and offers very generous benefits.

    Those school districts that do manage to negotiate other insurance carriers see their costs fall. On average, the 18 districts who were able to switch plans saved $282,079 their first year. As Deb Huppert, the business manager for the Prescott School District, explains “WEA has great insurance, excellent insurance, but we paid for it dearly. [The new carrier] wrote us a plan comparable to WEA. Put side to side overall, it’s actually a better plan.”

    Statewide, analysts estimate that Wisconsin taxpayers would save between $68 and $114 million if school districts switched to different health insurance carriers. Naturally, the Wisconsin Education Association does not want this to happen..

    Collective bargaining gives the Wisconsin Education Association the power to insist that school districts buy health insurance from the trust they created. If that means that taxpayers have to pay more, they are fine with that – another reason why government unions should not have a monopoly on the public workforce.

    Co-authored by Forrest Ball. Ball is currently a member of the Young Leaders Program at The Heritage Foundation.

    Posted in Economics [slideshow_deploy]

    3 Responses to Collective Bargaining and Competitive Costs: The Case of WEA Trust

    1. Bobbie says:

      Since when do public servants get royalties? If there was any decency in government control it would show government monopolies unethical, deceptive and forbidden! I have no respect for government union control. Barely any trust in Government themselves. I appreciate the honest officials such as Governor Walker, Governor Christie, Governor Jindal, Governor Brewer etc. they truly exemplify personal dignity, integrity, intelligence and strength! And totally appreciate their leadership of, for and by the people, the tax payers, the ones footing their bills. Wish these were qualifications of all elected officials, we don't live in a state of strong leadership…

    2. Patrick, Wisconsin says:

      It is unfortunate that Wisconsin citizens never had an opportunity to debate the issue of unions.

      Instead of Walker making this his platform prior to the election, he kept silent. He then went after recycling, selling power plants, and dividing up the UW system without discussing these with the citizens. The bill also changed how medicate would function.

      Wisconsin is not as ideological as many parts of the country, but it does value education and good government. So while your arguments against unions might be undisputed, the people of Wisconsin were never given an opportunity to participate in any debate regarding the bill.

      As you can see, thousands of protesters later and the union concessions, many citizens are still unheard and compromise is nowhere to be found. That has led many in Wisconsin to wonder if this was ever really about budgets at all.

    3. Jeanette Beschta says:

      There are so many lies and misconceptions in this piece, it must have been written by FOX NEWS. Talk to districts that left WEA and then went back because the alternative plans were very poor and the service was terrible. Private companies need to make big money for shareholders, so denying coverage is the goal.

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