As I return to being a trustee on the Local 802 Musicians Health Fund after a three-year hiatus, I am remembering the wise words of Barbara Caress, the Segal actuary who served on the fund until she retired in 2003:

“You’ll never get ahead financially in health care. You will swim as hard as you can just to stay in one place.”

Her words are truer than ever now. The U.S. is spending more than $4 trillion annually for health care. That works out to over $12,500 a year for every human being in the country. Annual rises in healthcare costs hover around 6 percent and sometimes spike to 12 percent.

This hostile climate makes it ever challenging to offer meaningful health coverage to musicians, many of whom work on a freelance basis. The value of the coverage offered by the Local 802 health fund is about $25,000 a year for a family. But you are guaranteed the coverage for much less: $4,300 a year in employer contributions plus $4,800 in premiums for a family. This requires a delicate walk on the narrow pathway between what the health fund can support, what coverage musicians want, and how much they are willing to sacrifice in wages or work rules to get it. The fund’s relatively small size also makes it vulnerable. A few serious illnesses can disproportionately spike the costs beyond what is projected.

There have been times when musicians made sacrifices in wages or work rules in order to bring more money into the fund, once in 2007 and again in 2019. Both times, the money was absorbed and spent on medical claims — and the fund returned to its precarious equilibrium, sometimes in the black, mostly in the red.

So what can a policy maker do? Answer: stay in touch with the bargaining units! A number of times over the decades, Broadway musicians who comprise most of the health fund participants, questioned the value of having a health fund. But each time the full bargaining unit has weighed in, it has been very clear that the fund is important to the majority. Then the tougher question is: what are you willing to pay for it? What are you willing to sacrifice for it?

Those are questions that can only be answered by the bargaining units. It is our job to be explicitly clear about what the costs are and what the sacrifices might be.

To that end, here is a brief report on the state of the health fund.

• Increased employer contributions in 2019 earned around $400,000.
• The HMO was costing the fund over $1 million annually. Eliminating it in 2019 saved $400,000 that year and the rest of the savings came in 2020.
• Annual deficit decreased from $2.7 million in 2018 to $1.8 million in 2019 mostly because of the increased employer contributions and the $400,000 savings on the HMO.
• Income was at a high of about $14 million in 2019 (employer contributions plus premiums, COBRA and other income, like investment returns).
• Income was down to about $8 million in 2021 and is projected to bottom out at $7.4 million this year because of the pandemic.
• About 1,830 people were covered in 2019 with about 865 on either Plan A+ or Plan A. The rest were on Plan B, which is not medical coverage: it is dental and vision only.
• September 2020 was the first significant pandemic drop, with 1,440 covered and 721 on the A plans.
• March 2021, the number of covered dropped to 925, with 487 on the new Recovery Plan A, which is the only current “A” plan.
• Currently, 833 are covered, with 501 on Recovery Plan A and the rest on Plan B.
• Annual deficit rose from $1.8 million in 2019 to $6 million in 2021. Though the number of people covered had dropped way down in 2021, claims were still high, likely because they were carried over from the previous year.
• Segal, the fund’s actuary, projects the annual deficit will plummet to around $514,000 in 2022, largely because they project that only 736 people will be covered, generating about half the claims total of 2021.
• Segal projects the annual deficit will return to about $2 million by 2024 as more musicians return to work post-lockdown, earning credits and getting benefits. The projection is also based on percentage increase in cost assumptions and employer contribution assumptions.
• Fund assets have dropped from $14.4 million in 2018 to $4 million in 2021.
• The fund’s current assets are the equivalent of 6.2 months of claims and operating expenses. Segal recommends that, for a fund of the MHF’s size, assets in reserve should cover at least 9 months of operating expenses.

The last year the fund really broke even was 2017. Since then the expenses have exceeded the income by $1 million to $2 million, pre-pandemic. This goes back to Barbara Caress’s statement about swimming as hard as you can to stay in one place. Because healthcare inflation is so high, expenses inevitably surpass income no matter how hard you try to keep up. There are only a couple of levers available to control it: increase income, decrease expenses. The downside of increasing income is the burden placed on musicians who sacrifice either wages or work rules for additional income to the fund, pay higher premiums or pay more out-of-pocket to use the services. The downside to decreasing expenses is cutting the services covered. Additionally, under the Affordable Care Act, only so many services can be cut before the plan is not considered viable coverage.

A note about viable coverage. In 2014 when the fund was last overhauled, it was clear Plan B — with its $5,000 annual cap on benefits and its lack of prescription or hospital coverage — was not viable. We trustees at the time decided to convert Plan B to non-medical or “excepted” benefits. If we had not done that, musicians who qualified for Plan B but who sought more complete coverage on ACA marketplaces would have been ineligible for premium subsidies because they had the “offer” of employer coverage, insufficient as it was.

The huge cost increases for the fund are not new and it looks like it will be a continuing problem which has been made much worse by the pandemic. It will take creative thinking, transparency and shared goals for us to see our way through.

I welcome your thoughts on my analysis; you can e-mail me here, but please — if you have any specific questions about your Local 802 health coverage, send an e-mail to hbp@local802afm.org.

Martha Hyde is a multi-woodwind player who performs on Broadway. A member of Local 802, she is also a trustee on the Local 802 Musicians Health Fund and was recently re-elected to the Local 802 Executive Board.