Workforce Management October 8
Can the UAW Take the Wheel and Steer Its Health Care Obligations to Workers and Retirees?
For its proposed health care trust to work, the union will have to change retiree behavior or reduce what it pays medical providers.
October 8, 2007
Can UAW Take the Wheel and Steer Its Health Care Obligations to Workers and Retirees?
The deal between the United Auto Workers and General Motors means the union, long a critic of the American system of employer-sponsored health care, will have to put its newfound money where its mouth is.
The contract proposal, which was agreed upon September 26 and remains subject to court approval, will transfer from GM around $35 billion in cash and stock to the union to pay for retiree health care costs.
Should the United Auto Workers get a similar offer from Ford and Chrysler regarding retiree health care benefits, the union could have upwards of $70 billion to spend on more than 500,000 beneficiaries, making it among the largest health care purchasers in the United States. But in health care, where costs have risen more than 70 percent in the past five years, even $70 billion can last only so long.
In the equation that produced health care costs that nearly sent GM into bankruptcy, costs must drop for the union, or the health care trust—known as a voluntary employees beneficiary association, or VEBA—will find itself bankrupt.
To avoid insolvency, the union will have to adjust the behavior of retirees. It would most likely have to change the benefits incentives that drive over-utilization of health care or reduce the amount the union pays health care providers.
UAW president Ron Gettelfinger promised workers the fund would remain solvent for 80 years without any reduction in benefits.
“The funding level we have negotiated is expected to allow the VEBA to continue to provide benefits without change for the lifetime of current and future retirees,” he wrote in a letter to members.
Those familiar with the union’s thinking say the UAW will address costs by utilizing the full force of its purchasing power, which will grow if Ford and Chrysler offload their liabilities into the VEBA.
The union could create networks of efficient lower-cost doctors, negotiate lower rates with hospitals, abandon brand-name drugs in favor of generics and make changes that General Motors never had the freedom to make.
“The trustees of this VEBA are going to aggressively manage this fund to protect and maintain health care for retirees similar or equal to what they currently have for as long as they possibly can,” says Kristin Dziczek, senior project manager at the Center for Automotive Research in Detroit.
Lance Wallach, a consultant on VEBAs, believes the union must change its benefit structure to encourage more responsible spending and healthier living, including among retirees responsible for the bulk of health care spending.
“The only way for this VEBA to work is for whoever is going to administer it to change the behavior of the workers,” Wallach says. “If they don’t do that, this absolutely won’t work.”
One escape valve for the union is to change the relationship between health insurance and employment. Toward that end, the union, with $15 million from GM, will establish the National Institute for Health Care Reform “to expand access to high-quality, affordable and accountable health care coverage for all Americans,” the union wrote.
“I don’t know where it ends up, but [the union-run VEBA] is certainly part of the transition away from employer-based health in the United States, says Dave Andrea, vice president of industry analysis and economics for the Original Equipment Suppliers Association, the trade group for auto parts manufacturers.
Could We Have This Debate Before It Is Too Late?
________________________________________
July 10, 2013
Call (516) 938-5007
________________________________________
Is the use of fully insured group health insurance products as stop-loss coverage for group health plans going to remain a viable solution? The obvious question that follows is: Are State Departments of Insurance Compelled by the Affordable Care Act (ACA) To Limit Fully Insured Health Products to Minimum Essential Benefits?
Short answer is a resounding No. This is an intriguing question which is being hashed out across our land and I am sad to say that most DOIs are getting it wrong. Section 1301, Paragraph (b), 1, A, the ACA is very clear in its definition of a health plan:
1) Health Plans—
(A) In General.—the term ‘‘health plan’’ means health insurance coverage and a group health plan.
Did that come through? “And a group health plan”.
One of the things that came out of the ACA, which I only hear complaining about, is the Medical Loss Ratio (MLR) mandate; 80% of small group (99 and under) and 85% of large group premium dollars must go to fund patient care. This puts fully insured products in the strange position of being underpriced as a stop-loss product.
Fully insured as a stop-loss is underpriced for a couple reasons.
1. Traditional stop-loss runs at a Medical Loss Ratio somewhere around 60%. The difference of 20% - 25% should jump off the page when you think about this.
2. The risk. Specific deductibles of $20K - $50K or more turn into standard deductibles of $5 - $25K. The biggest thing about this is that we are working with “standard” deductibles which limit deductible count to one or two per family and I am not speaking of aggregate v. embedded, I am truly speaking of one or two deductibles per family.
Just when this is dawning on the market and employers are finding ways to offer truly affordable benefits to their people, some state departments of insurance have disallowed High Deductible Health Plan (HDHPs) from existing legally in their state. Instead they might consider requiring health plans to comply with the ACA and keep offerings as diverse as possible to allow the market to function and keep prices down.
Let’s do a quick mental exercise to illustrate my point. Track with me on premium costs for a moment: Premiums rise exponentially as deductibles go down. If the desired effects are lower costs, then it makes sense to raise my deductible… But what if I raise only MY deductible and leave my employees with the same rich benefits that are currently in place? This lowers costs while staying within the bounds of the ACA because I am doing it all under a “group health plan.” Add to this logic some actuarial data: If 25%-35% of premium costs are associated with Rx copays and 20%-30% of premium costs are attributable to office visit copays, then I can lower premium costs by 45%-65% merely by removing them from the insurance and putting them back in as a “plan” item. My employee enjoys the same benefit and I get to keep what is not spent. This is as much of a win-win as the market has seen for some time.
This powerful strategy brought to the market by companies like Benefit Plus Plan works and will be much more difficult to implement when HDHPs are taken away.
This brings us back to the point of this article; the question: is the use of fully insured group health insurance products as stop-loss coverage for group health plans going to remain a viable solution?
Could we have a debate on this before it is too late?
July 10, 2013
Call (516) 938-5007
________________________________________
Is the use of fully insured group health insurance products as stop-loss coverage for group health plans going to remain a viable solution? The obvious question that follows is: Are State Departments of Insurance Compelled by the Affordable Care Act (ACA) To Limit Fully Insured Health Products to Minimum Essential Benefits?
Short answer is a resounding No. This is an intriguing question which is being hashed out across our land and I am sad to say that most DOIs are getting it wrong. Section 1301, Paragraph (b), 1, A, the ACA is very clear in its definition of a health plan:
1) Health Plans—
(A) In General.—the term ‘‘health plan’’ means health insurance coverage and a group health plan.
Did that come through? “And a group health plan”.
One of the things that came out of the ACA, which I only hear complaining about, is the Medical Loss Ratio (MLR) mandate; 80% of small group (99 and under) and 85% of large group premium dollars must go to fund patient care. This puts fully insured products in the strange position of being underpriced as a stop-loss product.
Fully insured as a stop-loss is underpriced for a couple reasons.
1. Traditional stop-loss runs at a Medical Loss Ratio somewhere around 60%. The difference of 20% - 25% should jump off the page when you think about this.
2. The risk. Specific deductibles of $20K - $50K or more turn into standard deductibles of $5 - $25K. The biggest thing about this is that we are working with “standard” deductibles which limit deductible count to one or two per family and I am not speaking of aggregate v. embedded, I am truly speaking of one or two deductibles per family.
Just when this is dawning on the market and employers are finding ways to offer truly affordable benefits to their people, some state departments of insurance have disallowed High Deductible Health Plan (HDHPs) from existing legally in their state. Instead they might consider requiring health plans to comply with the ACA and keep offerings as diverse as possible to allow the market to function and keep prices down.
Let’s do a quick mental exercise to illustrate my point. Track with me on premium costs for a moment: Premiums rise exponentially as deductibles go down. If the desired effects are lower costs, then it makes sense to raise my deductible… But what if I raise only MY deductible and leave my employees with the same rich benefits that are currently in place? This lowers costs while staying within the bounds of the ACA because I am doing it all under a “group health plan.” Add to this logic some actuarial data: If 25%-35% of premium costs are associated with Rx copays and 20%-30% of premium costs are attributable to office visit copays, then I can lower premium costs by 45%-65% merely by removing them from the insurance and putting them back in as a “plan” item. My employee enjoys the same benefit and I get to keep what is not spent. This is as much of a win-win as the market has seen for some time.
This powerful strategy brought to the market by companies like Benefit Plus Plan works and will be much more difficult to implement when HDHPs are taken away.
This brings us back to the point of this article; the question: is the use of fully insured group health insurance products as stop-loss coverage for group health plans going to remain a viable solution?
Could we have a debate on this before it is too late?
All you wanted was a comfortable retirement.
http://www.lancewallach.com/
What you got was fraud, incompetence, and scams. Fortunately, Lance Wallach and his team are here to help you protect your assets and keep the IRS out of your pockets!
What you got was fraud, incompetence, and scams. Fortunately, Lance Wallach and his team are here to help you protect your assets and keep the IRS out of your pockets!
How to Find the Right Experts to Guide You Through These Times
How much money have you lost in the market today? Is your insurance company still in business? Will it be in business tomorrow? Are you still working with your insurance agent financial planner, stock broker etc. who put you into this situation? Are you going to do anything about your situation? If you are like most people you will sell stuff and lose money, or do nothing while you lose more, your bank and insurancecompany goes out of business and your retirement plan savings disappears. It does not have to be this way. None of my clients have lost money. My retirement plans went up in value every month in 08. Why did you not have the same results.? Who do you listen to for advice? Your broker, insurance agent financial planner, or your friends? They have all lost money. Things are going to get worse. You can do something to get your money back, or like most people keep losing. Don't believe me put Lance Wallach into Google or any search engine to see what I do. Then compare it to whoever advises you. Who would you listen to now?
Can You Recover Money from 419 and 412i Plans? - HG.org
Can You Recover Money from 419 and 412i Plans? - HG.org
Welfare Benefit Plan Fraud: What Remedies Are Available? If you’ve been the victim of a 419 Welfare Benefit Plan scheme and now find yourself owing the Internal Revenue Service (IRS) taxes on something you were told was going to be tax deductible, it’s important to know what remedies might be available to you.
Welfare Benefit Plan Fraud: What Remedies Are Available? If you’ve been the victim of a 419 Welfare Benefit Plan scheme and now find yourself owing the Internal Revenue Service (IRS) taxes on something you were told was going to be tax deductible, it’s important to know what remedies might be available to you.
Remedies for abusive tax shelter schemes
Lance Wallach says that there are remedies for those who have been injured by an insurance company’s abusive tax shelter schemes. He predicts that we’ll see a huge spike in the number of people getting audited by the IRS.
Lance Wallach says that there are remedies for those who have been injured by an insurance company’s abusive tax shelter schemes. He predicts that we’ll see a huge spike in the number of people getting audited by the IRS.
Subscribe to:
Posts (Atom)