State faulted on lack of insurance for some workers

Governor Mitt Romney wants businesses that refuse to provide health insurance to their workers to pay a higher minimum wage or post decals in their windows telling customers they do not offer coverage. But in suggesting ways to pressure employers into being good public citizens, the governor has neglected to mention one prominent offender: his own administration.

The executive agencies under Romney's purview do not provide healthcare coverage to roughly 2,300 contract workers, treating all of them as if they were private consultants, even though some work full time in jobs that are identical to those of full-fledged state employees. They include computer programmers, secretaries, and doctors.

A Romney spokeswoman, Shawn Feddeman, defended the practice, pointing out that the state provides healthcare coverage to all of its regular full-time workers. In some cases, Feddeman said, the state provides a subsidy to contract workers to help pay for health insurance premiums. She could not say how many fit under that category.

But the longtime practice,well known to the workers without state insurance, is criticized by labor unions and academics who see a growing reliance on consultants and contractors by employers who want to save money. It is generally more expensive for an individual to buy insurance on the private market, as opposed to purchasing it through an employer.

"It's a method of union avoidance, a method of paying a lesser wage and not paying benefits and transferring the risk and responsibility totally onto the employee," said Elaine Bernard of Harvard Law School's Labor and Worklife Program, which recently released a report on the growing use of contractors in the private sector.

The state has long used private-contract workers to supplement its regular workforce, which totals about 41,000 in the executive agencies under Romney's control. As far back as 1986, a state auditor's report criticized Governor Michael S. Dukakis for his extensive use of contract employees, saying he was using them to avoid salary ceilings and to get around civil service rules and other protections granted to regular state workers.

The state saves money by using contract workers because it provides health insurance only to employees who are in so-called regular state positions, work at least 37.5 hours per week, and participate in the retirement system, according to Dolores L. Mitchell of the Group Insurance Commission, which oversees insurance coverage for the state workforce.

Some private contract workers are hired to do short-term projects and are true consultants, in the sense that they have other clients. Others are employed on a permanent basis, working full time or nearly so.

"This has been going on for some time; it rises and falls with the state's economy," said Michael Grunko, president of SEIU Local 509, which represents about 7,500 state employees. "When things get tight, like private industry trying to outsource, this is a way to get work done without making other cuts in the agency."

During the recent economic downturn, many private employers expanded their use of contract workers to lower costs, according to Bernard's study.

Most large firms provide health insurance and other benefits to their full-time employees, but they can avoid that commitment by categorizing workers as self-employed or independent contractors, instead of adding them to the regular payroll.

Kevin Preston -- Massachusetts director of the National Association of Government Employees, which represents about 14,000 state workers -- called the use of such employees by the state a chronic problem.

"They do the same things as state employees; they sit next to state employees, but they call them consultants to get around the system," said Preston, who insisted that the overwhelming majority of such workers are not consultants with other clients.

During the Dukakis administration, State Auditor John J. Finnegan estimated in 1986 that there were about 2,000 full-time contract workers in the five state agencies he surveyed.

Dukakis defended the use of the consultants, most of whom were believed to be working in agencies under his control.

Romney administration officials could not immediately calculate the number of full-time contract workers on the payroll, but Feddeman said it is likely that more than half of the 2,300 consultants are part-time and that some of them receive extra money to help them pay private insurance premiums.

The 2,300 figure does not include people the state employs through temporary employee agencies, however.

"For those individuals in Massachusetts who don't have health insurance, the governor is working closely with the Legislature to develop an affordable insurance they can purchase," Feddeman said.

As part of his healthcare plan, Romney has proposed changing state regulations to allow insurers to offer cheaper, bare-bones health plans to small businesses and individuals.

But Dr. Virginia E. Byrnes, a physician who is a contract worker without health benefits at the Massachusetts Rehabilitation Commission, said it is "ironic that [Romney] is trying to coerce the private-sector people to provide health insurance when there are so many people working for the state who don't have benefits."

Seventy-nine of the 787 employees at the agency are contract workers, according to spokeswoman Donna Rheaume.

"Surely if the state can remedy its own inequities it would inspire small businesses to do the same," Byrnes wrote in a letter she sent to Romney earlier this month.

Byrnes gets health insurance through her husband's employment. At a salary of $1,575 a week, she says she knows she would have a much easier time affording private insurance than the secretaries and mailroom employees at the Rehabilitation Commission who are in the same situation.

Said one secretary: "It's very tough. I love my job because of the flexibility. But it makes you want to go and look for another job when you don't get benefits."

The secretary, who spoke on condition of anonymity because she feared retribution, is employed by a temporary help agency but has worked full time at the Rehabilitation Commission for four years.

The secretary said she makes $13.25 an hour and works 37.5 hours a week, not nearly enough to afford private insurance. She and her two children qualify for MassHealth, the state's Medicaid program.