In 2011, the Legislature enacted the Publicly
Funded Health Insurance Contribution Act, 2011 PA 152, allowing public
employers to choose from three options for the payment of health insurance
benefits to their employees and elected officials: (1) a hard cap on monies
spent by the employer; (2) an 80/20% split between the employer and the
employees; or (3) an opt out of the spending limits entirely by a two-thirds vote
of the governing body. The issue in this case concerns the second option, which
provides that “[t]he 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.” MCL 15.564. The Michigan Employment Relations
Commission (MERC) held that allocation of costs under this provision is subject
to mandatory collective bargaining under the Public Employee Relations Act
(PERA), MCL 423.215(1). The MERC further held that, where the definition of “medical
benefit plan” specifically excludes benefits to retired employees, and where an
“unbundled” rate limited to active employees (rather than including retirees)
was available, the respondent Shelby Township was required to use that
unbundled rate to calculate employee premiums. The Court of Appeals affirmed
the MERC’s decisions. The Supreme Court granted leave to appeal to address
the following questions: Is calculation
and/or allocation of employee contributions a mandatory subject of collective
bargaining? Does the MERC have the authority to interpret the health insurance
act, and, if so, to what extent? Can the MERC preclude a public employer’s use
of illustrative insurance rates that include retiree health insurance costs
when the Department of Treasury allows such use?