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by
Mona Field, Social Sciences Division (writing as an individual member of
the GCC
Labor/Management
Health
Benefits Committee)
Headlines:
¾ CalPERS
to Raise Health Premiums 25% (Los Angeles Times, 4-17-02)
¾ Aetna
Shares Rise 13% on Medical Plan Gains
(Los Angeles Times, 4-26-02)
¾ Health
Cost Hikes Growing (Business
Insurance, 12-10-01)
Approximately
one in five Californians has no health insurance.
We are among the lucky 80 percent who have medical coverage.
Yet we now face the current double-digit inflation in health
insurance premiums.
The headlines tell the story: costs are skyrocketing and for some insurance
companies, so are profits.
But employers
(including public entities such as GCC, now grappling with huge budget
cuts due to the state’s crisis) are facing huge cost increases just to
keep the same coverage.
WHAT
IS FUELING THIS EXTRAORDINARY INFLATION?
Health care
costs are rising rapidly due to increased use of medications (many of
which did not exist until recently),
increased costs of hospitalization, a shortage of nurses (driving
up the costs of recruiting and keeping nurses), the aging workforce (we
get sicker as we get older), and the consolidation of the insurance and
hospital industries.
At this time
in Southern California, there are only a handful of companies willing to
write policies for health care plus the handful of HMOs that are still
functioning (many have gone bankrupt).
Like
home insurance, medical insurance has not been profitable enough for
demands of shareholders, and many companies are simply quitting the
business or markedly increasing their premium rates.
WHAT
IS THE ROLE OF OUR HEALTH BENEFITS COMMITTEE?
Your
Health Benefits committee, made up of union and management
representatives, meets monthly with
our district insurance broker, Charlie Mason, and his associate,
Kim Fossen. Kim and Charlie
provide excellent information and a great deal of hands-on service to
employees who need troubleshooting regarding their insurance.
We
have been fortunate that Charlie, Kim, Menchie Braza from Payroll, and
our contacts at Blue Shield and Kaiser have kept our individual problems
at a minimum. But they, and
the committee itself, cannot control the skyrocketing costs. The
committee recently voted to request bids from other companies.
It will take a few months for that process to be completed.
However, recent experience in local public agencies suggests that
the insurance industry consolidation offers us a restricted set of
choices and that insurers are not underbidding each other as they might
have done in the past.
WHAT
ARE OTHER DISTRICTS DOING?
A
comparison with other CC districts brings out some interesting data*,
including the following:
Most
districts still provide full premium payments for employees.
However, at El Camino, which uses CalPERS to provide health
coverage, only employees who choose an HMO get full premiums for
themselves and their dependents. Employees who choose a more expensive (PPO)
option then get full premium only for the employee; their dependents
must pay 30 percent of the premium (in other words, money comes out of
employee paychecks to cover spouses and other dependents).
At Coast College district, employees contribute one percent of
their salary towards health coverage plus $500 towards dependent
coverage (per year). In
some places, classified employees are restricted to the lower cost HMOs
and must pay out of their paychecks to get more expensive coverage (Rio
Hondo). In some places, the
cost of Kaiser is covered, but employees must pay the difference if they
want a non-HMO system.
In
other words, the world of “fully paid premiums” is changing.
In the private sector, fully paid health coverage is nearly
extinct. Most employers
require employees to pay a share of insurance costs.
WHAT
ARE SOME OPTIONS?
Options
include:
¾ Plan
design changes: increased
co-payments; increased deductibles
¾ Cafeteria
plan: a set dollar amount per employee for a range of insurance options.
This plan usually includes some kind of TSA option for those who
need less insurance and have “extra” dollars (GCC had this kind of
plan many years ago).
¾ Find
new providers (insurance companies) that charge less
¾ Charge
employees a portion of premium out of their paychecks
None of this sounds appealing, and anything relating to health
benefits must be negotiated.
The role of the committee is to get information
from our broker, discuss options and report back to the negotiating
teams for CSEA, the Guild and the district.
The committee cannot negotiate, but it can recommend.
The issues will not go away.
You will inevitably be impacted. Watch for further updates. &
*Thanks to Vicki Nicholson and her staff for compiling the data
from other districts.
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