Bargaining Health Care

1. Bargaining Health Care Under ESSB 5940

2. Paying for Benefits: A Variety of Concepts • State Allocation • Pooling • Employer pays HCA “carve out” • Employer contributes to the pool • Employer pays % of premium • Depends on philosophy: • Everyone’s need is equally met, or • Everyone gets the same amount in dollars

3. 5940 Origins

4. 5940 Content

5. Immediate Issues • HDHP • HSA • Plan with Premium Share Not Above That of State Employees

6. Other Issues • Minimum premium share • Richer plan subscribers pay more • Bids

7. When to Bargain • Law has been in effect since July 2012 • Items are required to be offered • No phase in language • State agencies say happens when contract expires • Some items require reporting of progress to the state in 2013

8. High Deductible Health Plans

9. Current Key Provisions • Minimum deductible: • $1,200 individual • $2,400 family • Out-of-pocket maximum: • $6,050 individual • $12,100 family

10. HDHP – Different than Traditional Plans No first dollar coverage (except preventive care) All services, except preventive care, are subject to deductible Prescription drugs are subject to deductible

11. Health Savings Account (HSA) • An HSA is a tax-sheltered savings account • Only available to people with an HDHP • Employer or employee may contribute • HSA annual contribution limits (from any/all source): • $3,100 individual • $6,250 family

12. HSA Overview – Continued • Medical and prescription drug services are subject to plan deductible • Individually owned account • Portable • Unlimited rollover of unused dollars (not “use it or lose it”) • Eligible expenses: • deductible, coinsurance, prescribed medications, vision and dental expenses

13. HSA – Special Eligibility Criteria You’re eligible to open a health savings account if you: • Are covered under the high deductible health plan • Are not enrolled in Medicare • Don’t have coverage under another health plan (spouse’s plan, spouse’s Flexible Spending Account, etc.) • Are not claimed as a dependent on someone else’s tax return • Can not participate in a Health Care FSA and HSA simultaneously

14. HSA Recordkeeping • You must keep records to show that: • The distributions were exclusively to pay or reimburse for qualified medical expenses • The qualified medical expense had not been previously paid or reimbursed from another source • The medical expenses had not been taken as an itemized deduction in any year

15. Disadvantages • Strict eligibility criteria, can’t be in regular Flex Plan • Cost-shift to employee • “Race to the bottom” concerns • Money going into an HSA decreases the Pool • Unclear whether state funds can be used for HSA • Because it accrues to the benefit of the employee • State agencies say yes; law is less clear

16. Adverse Selection • Attractive to the healthy or wealthy • Damages traditional plans

17. Recommendation • Negotiate a specific plan into your contract • Provide no employer payment into the HSA; direct money into the Pool instead • Create no incentive for your members to move to HDHP/HSA plan • Inform your members about the dangers of these plans

18. Plan with Premium Payment not Greater than that of State Employees

19. Definition • School districts will offer at least one health plan that has monthly co-premiums that do not exceed premiums paid by state employees • Roughly 15% of premium cost • State plans are not all the same • State employee benefits are also negotiated • Pre-conditions our bargaining on the bargaining of their unions • Difficult to say exactly what this means

20. Recommendation • WEA Select EasyChoice Plan • Already exists, and you have it! • Similar in out-of-pocket costs (composite rate) • Or, bargain that employer will pay 85% of premium cost of one or more plans

21. Minimum Premium Contribution

22. Does Everyone Have to Pay? • Required only if district pays for benefits beyond the Basic Five • Health, dental, vision, LTD, group life • Not everyone reads the law literally on this point • Implied by the 3:1 Ratio, however

23. Those with Richer Plans must pay Higher Amount

24. They already do. • “Richer” is not defined in the law • Again, this is required only if district pays for benefits beyond the Basic Five

25. Recommendation: • As you move toward 3:1 ratio… • Members on family plans will pay less • Members on single plans may pay more • Increase employer payment toward benefits

26. 3:1 Ratio

27. Moving Toward the Ratio • “Progress” rather than instantaneous • Applies to all offered plans • Does not describe what occurs to employee/child or employee/spouse rates • Shifts costs from families to singles (unless more money comes from employer)

28. What 3:1 Might Look Like

29. Bargaining Options for 3:1 • Wait • Increase employer payment toward benefits • Shift costs through rate structure • Shift costs through bargaining a premium payment by Singles that will be applied toward Families’ premiums

30. One-Year Duration?

31. Not So Much… • Statement in law applies to insurance trust agreements, not to collective bargaining agreements. • RCW 41.59 (certs) and 41.56 (classified) allow multi-year contracts. • One management law firm has been attempting to bargain one-year insurance deals. • Just say no. • Don’t agree to re-open to bargain insurance as a single issue

32. Competitive Bidding

33. Open Competitive Process • Subject to bargaining • Who determines criteria for plans and bids • Who receives the bid information • Which bid is adopted • What justification is adequate to determine that, “…an open process would compromise cost-effective purchasing, with documentation justifying the approach.” • Assistance with justification

34. Recommendation • Do not rely on district-hired brokers • They have their own self-interest and profit motive • They are employed by the district and are influenced by the administration • They should not control issues that should be bargained by you • You do not have to take bids each year • State plans bid every 5 years only • Look at exception: May avoid bidding process if it will be likely to produce disadvantageous results

35. Innovation

36. Examples of WEA Plan Innovation: • Dependent eligibility audit • Health Risk Assessment • Wellness Coaching • Biometric screening pilot • EasyChoice • Care/Case Management • Specialty Pharmacy

37. Recommendation • Bargain good insurance plans that contain elements of innovation

38. The Exchange

39. Part of “Obamacare” • Will change how insurance is marketed • May change how we bargain over insurance • Another reason not to do anything too drastic too soon

40. Questions mmcnett@washingtonea.org