Health fund changes part 2. How can it be safely restructured?
Last post, I talked about how the health fund works now and the breakage it relies on to stay healthy. If the trustees wanted to remake the fund so more people are covered, what could that look like?
The easiest way to do that would be to leave the structure as is and provide another level of coverage between Plan A and Plan B. This is something the trustees considered prior to the ACA taking effect in 2014. Including a plan - originally considered as Plan B - that would require semi-annual employer contributions of, say, $1000 (between the $2000 required to qualify for Plan A and the $500 required to qualify for Plan B) would certainly make many people who don't qualify for essential medical coverage under Plan A or A+ qualify. But, at what cost? The actuaries employed by our plan ran all the numbers back in 2012 or so and found that yes, we could do it safely for the fund. But, it would necessarily mean providing a "low bronze" plan which would offer much poorer benefits for those who qualify than our other full plans do. Poor insurance is better than no insurance? Perhaps, but because of the way the ACA works, maybe not. Offering a plan with a low benefit level would serve as an offer of "employer provided health insurance". Meaning that those who qualify would not be entitled to any subsidy if they decided not to take the low plan on offer and shop for something better on the government Exchanges. Again, the numbers run at the time showed that people with low earnings who would otherwise qualify for an Exchange subsidy would do better on the Exchange as long as they weren't hampered by an offer from our plan. It seemed counterproductive to offer a plan that came with such low benefits when people could buy their own better insurance for the same money (with subsidies). So, the decision was made to offer 2 essential medical benefit plans and make Plan B a non-essential benefit plan (meaning dental and vision) to supplement essential medical plans bought on the open market by those who had to go that route.
Another possibility is to scrap all the plans we have and reduce the equation to one plan, for all, that requires a lower rate of employer contributions than we currently have for Plans A and A+. This brings us to a discussion of what the insurance industry calls "disruption". As of June 2018, about 800 members qualified for one of our essential medical benefit plans. About 1400 lives (including spouses and dependents) were covered. What happens to all those members/lives if their plans go away and they are demoted to a single plan which, in order to be affordable for the fund, would necessarily offer much lower benefits? Their health insurance reality would be "disrupted". Their ability to plan their own healthcare would be "disrupted". Possibly their ability to choose doctors and procedures that those doctors believe are necessary could be "disrupted". Just looking at the Broadway bargaining unit, which represents the largest demographic that currently qualifies for Plan A+, how will they respond to knowing that they are accruing $9000/year in employer contributions and are forced to take the same low-level insurance as someone garnering $2000/year in employer contributions?
In my last post, I mentioned the notion of shared sacrifice. Would this really count as that? Or would that bargaining unit be forced to assume almost all of the sacrifice? I don't have the answer to this question. Nor to many others. Until our plan actuaries run scenarios, it is impossible to predict what level of coverage the fund would be able to provide, nor to how many, nor how this would affect the levels of breakage upon which the fund relies, nor the level of disruption to those currently covered.
I am, by no means, saying this can't or shouldn't happen. I am saying that there are lots of considerations which must be explored and this will require time and lots of work to accomplish. I do worry that these concerns may not get their due consideration in light of the fact that the institutional memory of the fund has been damaged. All 5 union trustees have been replaced in the last month and, just this week, the union side fund legal team has been dismissed. I sincerely hope that the union team will be rebuilt and educated well before any plans to restructure the fund are implemented.