A membership discussion of the severe financial pressures Local 802’s Health Benefits Plan has been facing for the last three years was launched at the February membership meeting. President Bill Moriarity has reported on the situation in several columns in Allegro (see President’s Reports of March 2001 and June 2001) and on Feb. 26 he opened a dialogue with 802 members on the approaches HBP trustees are considering to stabilize the Fund and its finances.
Moriarity outlined the losses the fund has experienced, amounting to approximately $2.5 million since 1999. These are due primarily to greatly increased insurance premium payments and prescription drug costs.
He pointed out that the HBP is an indemnity plan – the form of coverage that offers members the widest choice of healthcare providers, but is also the most expensive. Indemnity plans allow participants to choose whatever provider they wish, and then pay a percentage of “usual and customary” costs for the procedure (in our case, 80 percent). In contrast, Preferred Provider Organizations (PPOs) like MagnaCare develop networks of physicians who have agreed to a negotiated payment schedule. When the patient sees a network provider, s/he pays only a $10 copay, and the health plan reimburses the provider the amount that has been agreed upon, which is generally much less than would be paid to an out-of-network provider.
(Neither of these plans is an HMO. Health Maintenance Organizations require you to have a primary physician who is the “gatekeeper” to other providers: you cannot see a specialist unless the gatekeeper refers you to one. Both indemnity plans and PPOs allow you to consult specialists without a referral.)
When the Fund’s financial problems developed several years ago, Moriarity said, the Trustees established a PPO component affiliated with the MagnaCare network. The hope was that most members would begin using network providers, to take advantage of large savings in out-of-pocket expense. Quite a few members have done so – but not enough to produce the savings the plan needs.
He said the plan’s advisors, the Segal Company, “are telling us that we won’t be able to afford our current plan much longer, and are recommending strongly that it be restructured.” He pointed out that one very positive outcome of a restructure might be that the new plan might include hospitalization. The negative side is that making the PPO more attractive would probably entail making it much more expensive to see out-of-network providers.
The trustees have put out requests for proposals to 18 different companies. Moriarity stressed that no decisions have been made, and that Local 802 is committed to involving the membership in the discussion of alternatives, and to giving them early warning of any changes.
Although the number of members who attended the meeting was fairly small, an extensive discussion followed the opening presentation.
One member asked whether the union has any idea, yet, how much the coverage that is being explored is likely to cost an individual. (The answer was no; it’s too early in the process.) Others discussed problems they’ve been experiencing with long delays in payments to labs, resulting in barrages of collection agency and lawyers’ letters. A musician in the club date field stressed the importance of giving members as much notice as possible if the credits they need to qualify for coverage are increased. Another member asked whether 802 will need to negotiate higher employer health contributions, as collective bargaining agreements expire.
Executive Board member Bobby Shankin said he has been very happy with the quality of the network providers he’s seen, but he is concerned that doctors may drop out because they’re unhappy with the plan. He pointed out that any information we can get about how doctors rate the plan, or what the turnover rate is, should be considered when the time comes to evaluate specific proposals.
Executive Board member Mary Landolfi linked the problems 802 is experiencing in maintaining high quality coverage for members to the much broader crisis of health care in the U.S. “People should rise up in anger against the idea that corporations have the right to profit from people’s misfortunes,” she said.
Moriarity pointed out that there are two critical issues facing people in this country – the lack of access to health care and to affordable housing. “Neither of them can be solved without the pressure of a huge grassroots movement – and those movements don’t exist, in either arena,” he said. “And while 802 is committed to maintaining the best coverage possible for members, the fact is that the only real solution is to establish a national health care system. Unfortunately, that isn’t on the political agenda in the foreseeable future.”