It appears providers of healthcare plans for employees —including unions-- are starting to get down to serious business about how they will cut the cost of delivering benefits in the face of the federal Affordable Care Act (aka Obamacare) provisions going into effect at the top of the year.
A glaring example of how critical this issue is to plan providers and beneficiaries alike is exemplified by a major trucking labor story.
While members of the International Brotherhood of Teamsters (IBT) approved a national master agreement with United Parcel Service (UPS) in June, health-care benefits were such a sticking point for workers in the UPS Freight division that they felt strongly enough to vote down the five-year contract itself along with 17 local supplemental agreements and riders.
At the time, reported the Associated Press(AP), the Teamsters laid the blame for that rejection on a provision that would switch 140,000 employees from a UPS-sponsored health insurance plan to one that would be jointly administered by the company and the union.
Critics of that plan contended it would provide inferior benefits and require employees to pay higher deductibles and co-payments than under the UPS plan, but the union countered that the change was in response to a UPS proposal to cut health benefits, AP reported.
After the nay votes, UPS said it viewed those results as “part of the normal negotiating process,” with John McDevitt, sr. vp— Human Resources & Labor Relations noting that “ it will be 'business as usual' while UPS and the IBT resolve remaining issues…”
According to IBT, it held a meeting Sept. 4th to lay out changes in the health-care plan negotiated since the June vote for local union leaders representing Teamsters at UPS who currently receive IBT’s TeamCare health-care benefits or are moving into the TeamCare plan. The union said re-voting on seven of the rejected supplements and riders will begin on Sept. 18.
Ken Hall, IBT general secretary-treasurer and co-chair of its UPS National Negotiating Committee, said because the TeamCare plan will be receiving an “influx of hundreds of thousands of Teamster participants and their families, their bargaining power in the industry has increased… This allowed the trustees of the plan to make some improvements to the initial plan that are important to our members."
Among critics of the voted-down Teamsters-UPS health-care proposal is the Teamsters for a Democratic Union (TDU). “After being forced by the Vote No movement to reverse many healthcare cuts, the International Union is pulling out all the stops to push for members to approve the rejected contract supplements,” TDU said after IBT’s September meeting. … “Members voted ‘No’ [in June] to stop healthcare cuts, protect their benefits and win improvements in their supplements.”
Meanwhile, UPS is also dealing with how to bring down its healthcare costs for white-collar workers.
In a memo issued to employees recently, the company explained why, beginning in January, it will no longer provide spousal healthcare benefits to those spouses of UPS employees who work and are eligible for coverage form their own employer.
“Since the Affordable Care Act requires employers to provide affordable coverage, your spouse should be covered by their own employer— just as UPS has a responsibility to offer coverage to you, our employee,” stated the company.
The memo advised that about 33,000 spouses were currently covered under the UPS plan and “about 15,000 of these would have health care coverage available through their own employers.”
The package-delivery giant UPS pointed out that it had considered implementing a premium increase to cover spouses, but opted to limit eligibility as “one way to manage ongoing health care costs, now and into the future…”
UPS also noted that its decision was informed by considering what other firms were doing and said it found that “35% of those companies [researched] plan to exclude working spouses eligible for their own employer’s coverage in 2014.”
Dropping spousal coverage may well be the tip of an iceberg. Consider that management-consultant firm Oliver Wyman said results of its recent survey on employer-sponsored healthcare of over 1,300 firms “paint a nuanced, compelling picture of a major public institution on the verge sweeping change.”
“Only 8% of employers said they planned to discontinue coverage, and 42% said they planned to maintain the status quo,” the survey found. “But two-thirds said healthcare costs were unsustainable at current rates of medical inflation— and more than half would find them unsustainable even if medical trend fell by five percentage points.”
Oliver Wyman sought reaction to “the two alternative models that are gaining the most traction in the marketplace: private healthcare exchanges and value-based networks.” It found that 20% of employers were “willing to try them even if they saved no money” and an additional 50% were interested “if they saved money.”
The consultancy said employers also showed interest in working with benefits consultants on private exchanges or contracting directly with healthcare providers on value-based networks.