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The Buffalo News recently published a story that introduced to many people an interesting facet of local governance -- with a slight point sharpened at Niagara Falls.

First a little background: As most people know, government provides health insurance to its employees. Taxpayers pay for what is usually expensive and comprehensive, if not the Cadillac versions of health insurance for government workers. A health insurance policy for a government worker frequently costs more than $16,000 per year.

As a cost-cutting measure, certain government agencies are offering workers -- who do not need health insurance -- usually because they are already covered by the family health insurance policy of their spouses -- or because they have health insurance from another job -- an opportunity to accept a monetary payment in lieu of health insurance as part of their employment compensation package.

The Buffalo News did a fine job of reporting these facts and researching what various local governments pay employees who opt out of receiving health insurance. Of all those studied, Niagara Falls pays the highest opt out to its employees.

The state of New York, for example, pays employees belonging to the two largest unions $3,000 a year if they opt out of health insurance coverage.

New York taxpayers realize a savings of more than $13,000 for every employee who opts out since health insurance costs taxpayers $16,600 per year per worker.

Erie County pays $1,200 a year, when workers opt out. City of Buffalo employees get paid $1,000 to $1,200. North Tonawanda pays up to $1,925. Lockport not more than $2,000.

Niagara County -- $1,000.

Then we have Niagara Falls, which pays its employees $9,083, if they opt of out of health insurance coverage.

Yes, you read that right -- about eight to nine times higher than they do in Buffalo, Erie or Niagara County. Three times higher than New York state.

That is not to say there are no savings when employees in Niagara Falls opt out. Niagara Falls saves $8,837 for every employee who opts out of health insurance which costs Niagara Falls taxpayers $17,920 a year.

Presently, there are 45, out of the approximately 550 city employees, who will receive a total of $420,097 this year for not taking city-provided health insurance. The city, after subtracting additional payroll costs, will save about $350,000 by not providing these 45 people with health insurance.

Niagara Falls is perhaps one of the few government entities where taxpayers save less than half the cost of health insurance when employees opt out.

Had the city negotiated a deal similar to Buffalo or Niagara County, about $750,000 would be saved -- or better than 90 percent, if the same 45 employees opted out.

After it was revealed in the Buffalo News that Niagara Falls Council Chairman Sam Fruscione is among the 45 employees who collect the $9,083 opt out, a rash of what I would characterize as misdirected anger seemed to flash his way.

Comments made on line, and callers to the Tom Darro and John Restaino WJJL radio shows and the popular Sal Paonessa's NBN Internet talk show (nbn7900.com) seemed to target Fruscione, as if his taking the opt-out and not the high opt-out payment itself is somehow the problem.

Fruscione is a Niagara Falls public school teacher. He is also, as an elected official, an employee of the city. Fruscione chose to keep his school district health insurance and take advantage of the city's generous $9,083 a year opt-out provision.

By the way, according to several informed sources at city hall, another council member also collects the $9,083 per year opt out payment. She is Kristin Grandinetti who also works for the Niagara Falls school district.

This raises an interesting point: If Fruscione or Grandinetti had chosen to accept the city health insurance coverage, and opt out of the school district health insurance policy, they could collect $7,182 from the school district which also offers a generous opt out provision -- although not as generous as the city does.

The school district pays $1,900 less than Niagara Falls for employees who opt out of coverage. In the case of Fruscione and Grandinetti, by their taking the more generous city opt out, the city -- not the school district -- actually saved money. To make the point a little sharper, take the case of newly elected Niagara County Legislator Jason Zona, who is a firefighter with the city. He presently qualifies for health insurance that costs the city $17,900 per year.

He will soon have an opportunity -- as an elected county employee -- to take the county's health insurance or accept Niagara County's opt-out payment of $1,000. Or, if he prefers, Zona can accept the county's health insurance policy, cancel his Niagara Falls health insurance and take the city opt out and collect $9,083.

In Zona's case, he has a choice of collecting $1,000 or $9,083 depending on which health insurance policy he chooses not to take.

If he -- as most people would -- takes the $9,083 city opt out, then the city saves money -- and the county pays his health insurance.

That very informative website niagaratimes.blogspot.com, writing on the topic with their usual zest -- and provocative viewpoints -- provided another case illustration -- that of a former part time county employee who was also a full time city employee, who switched his health insurance policy to the county and collected the $9,083 city opt-out. On top of that his wife was a teacher. Since her husband had health insurance with the county, she could take the school district opt-out.

If my math is right, this couple would get $16,166 simply for not taking health insurance.

As egregious as this sounds on the surface -- and it clearly is not frugal governance -- both the city and the school district actually save money from this couple's joint opting out.

Although it may have been unintended, the higher opt-out -- when in competition with lower opt out plans -- is an incentive to opt out with the higher paying government agency.

That still does not make it efficient or fair that Niagara Falls pays nine times more than Niagara County for opt-outs of health insurance.

In the case of the individual -- be it Fruscione, Grandinetti, Zona or anyone else -- it does not seem fair to blame them for taking advantage of what they are legally entitled to receive.

Among the callers who expressed anger with Fruscione, I wonder who among them would have told the city, as apparently some expected Fruscione to do, "No thanks. Keep the $9,083 a year, even though I am entitled by law to get it?"

Are these Niagara Falls residents angry at the wrong guy?

"I think the average person looking at that says, 'That's too much,'" Mayor Paul A. Dyster told the Buffalo News of the high opt-out Niagara Falls pays. "I think they're obviously large by comparison to payments being made by other places, but that's what was agreed in the (union contracts.)"

But it was Dyster who agreed to it.

Admittedly, Dyster was not in office when the original 2006 agreement was reached with Unions that established the precedent for the high opt-out figure. Mayor Vince Anello was. But Dyster had a chance to change it.

His administration, not long before the election this year, negotiated and reached a five-year contract with union workers that allowed the opt-out payments to continue at the same high rate.

He might have been able to negotiate that downward, although, admittedly, it is far harder to take something away from people -- especially unions -- after they have been accustomed to receiving it for five years.

In the final analysis, the blame -- if there is any -- rests with no one in particular. The idea of opt outs is good for the taxpayer.

Perhaps the kind of reform needed may be to require a uniform and low opt out amongst all local governments and require anyone who has coverage elsewhere to opt out of the newest policy.

Niagara Falls Reporter www.niagarafallsreporter.com Nov. 22, 2011