Can be Bargain
By Bruce Shutan
Ever wonder how below-the-line health insurance stacks up against insurance for the average auto worker, government bureaucrat or Hollywood insider? It’s a question with a complicated answer.
Since all health plans are funded differently by employers and vary widely across all industries, it’s nearly impossible to make meaningful comparisons of co-payments and deductibles between the Motion Picture Industry Pension & Health Plans (MPIPHP) and above-the-line guilds as well as non-entertainment unions.
So says MPIPHP executive administrative director Tom Zimmerman, who also notes that the location of medical providers will influence the cost of health insurance (services will be more expensive in Beverly Hills than in the Midwest, for instance).
Still, there’s enough information to give the average crew member a general idea of what’s happening with key areas of the collectively bargained brotherhood. One place to start is the latest annual survey of employer bargaining objectives conducted by the Bureau of National Affairs.
Among the findings: 92% of the 141 responding organizations require rank-and-file members to share health-care costs through various techniques that include premium contributions, co-insurance, deductibles or a combination thereof. About half of plans with cost-sharing requirements intended to raise monthly premiums in their next labor negotiations and 39% said the same for co-pays.
Teresa Ghilarducci, a national organized labor expert and associate professor at the University of Notre Dame, says “union workers feel the pressure of high health costs probably more than most workers because they have to give up pay increases or take wage concessions to have these plans.”
She also notes that the lion’s share of premium increases in recent years of double-digit cost hikes can be traced to “insurance companies making less than expected on their investments and the huge part of health costs going to bureaucracies.”
Eyeing other unions
A closer look at health benefits coverage across the union landscape offers greater insight into how others are faring. Consider a few of the highlights:
• A proposed contract involving more than 70,000 workers for supermarket chains Safeway Inc., Albertsons Inc. and Kroger Co. who had been on strike or locked out of 852 stores in Southern California since Oct. 11 requires new hires to pay 20% of their health care premiums, though it would not impose premiums on current employees for two years. Union and management representatives say the move means workers will have more favorable medical coverage than their counterparts at Wal-Mart. Management initially sought $5 weekly health insurance contributions for individuals and $15 for families vs. the financial free ride they used to enjoy.
• About one-third of 34 states responding to the 2003 Segal State Health Benefit Survey reported that no monthly employee contributions are asked of collectively bargained state employees. The survey covers 80% of total state health plan enrollment. The average health expense for people working in this sector reached $5,571 in 2002 (that’s 16% of wages).
• More than 777,000 active and retired members of the United Auto Workers, along with surviving spouses, last fall agreed to new contracts with DaimlerChrysler, Delphi, Ford, Visteon and General Motors. The UAW was able to ensure that its members continue receiving fully paid health insurance that does not include cost shifting or benefit takeaways.
• Average health care contributions were expected to rise but not exceed 20% in a pact between General Electric and two of its unions, compared to about 17% under the previous agreement. In some cases, the premium increases that took effect in January were more than double the previous level, depending on an employee’s salary as well as marital and dependent status. Prior to the inked deal, 16,000 union members staged the first nationwide labor action at the company in more than 30 years to protest proposed increases in health-care payments.
• For the first time, Northwest Airlines is charging its workers for health benefits, which cost the fourth-largest U.S. airline $345 million last year. Beginning in January, employees began paying 20% of the cost of their health plan or about $60 a month for single coverage and $174 to $190 for family coverage.
In Hollywood, an above-the-line effort has taken shape to expand access to affordable health insurance. The Screen Actors Guild has come to the aid of members who are no longer eligible under the SAG health plan because of tighter benefits-eligibility requirements that took effect January 1, 2003 (though co-pays are still modest up to $15 and deductibles often are waived).
Performers with valid SAG cards have an opportunity to purchase HMO or point-of-service plans through the Entertainment Industry Group Insurance Trust. No medical pre-qualification is required for this so-called “guaranteed-issue” group health insurance program, which does not involve approval from an insurer’s underwriting department.
Another effort involves assistance with paying up to one-fourth of the benefits coverage for SAG members and their families. Marcia Smith, executive director of the SAG Foundation, reports that the guild’s nationwide “self-pay” program began “when we realized so many people would be dropping out of the plan.” Assistance also is available to members who cannot afford to pay the SAG plan’s new $50 monthly premium.
“The basic idea is that we really don’t want anyone to lose their health insurance,” explains Smith. “It’s the most important benefit that the guild offers to its members.”
Sustaining benefit levels
Under the latest collective bargaining agreement involving MPIPHP participants, co-insurance for prescription drug coverage rose modestly, while an effort was made to keep increases to a bare minimum for retirees who are on a retirement fixed income. The rate hikes “brought us more in line with the rest of the country,” Zimmerman says.
MPIPHP participants pay on average 4.3% less in out-of-pocket costs for each prescription drug claim than other union members (7.2% vs. 11.5%), while the plan pays on average 51% more per participant each month than other union plans ($69.64 vs. $46.02). Not surprisingly, more people use the MPIPHP drug benefit than comparable union plans (utilization among eligible participants averages 36% vs. 28% elsewhere).
If participants used generics over brand-name drugs for all their prescriptions in 2002, more than $53 million in MPIPHP plan costs could have been shaved off the $76 million price tag, which included a mix of generics and brands. A recent issue of MPIPHP’s quarterly benefits newsletter suggests the savings “could have been used in other ways to benefit participants.”
Zimmerman concedes that it will become increasingly difficult to maintain a rich level of benefits (including no monthly premiums) given the consistently rising cost of health care and challenging economic times. Still, he believes that “when you compare our health insurance benefits to others in the country, we’re in the top echelon.”
Below the Line writer Bruce Shutan has been covering the employee benefits industry for 15 years. Mark London Williams, who writes the page 2 Union Roundup column for Below the Line, contributed to this report.