Collective Bargaining Health Care in 2013
Collective bargaining in late 2012, early 2013 continues to be marked by uncertainty. In the fall the largest uncertainty was the presidential race. At stake was the means for addressing the economy as well as the survival of the Affordable Healthcare Act, legislation that Mitt Romney vowed to repeal.
After the election the uncertainty regarding the economy persists but the health reform law’s survival was eliminated. Nevertheless, uncertainty about the implementation of the Act and its real impact on both private and public sector employers is still very present and very significant.
It is apparent to your OPBA negotiators that public sector employers are preparing for the law’s uncertainties by stepping up their efforts to shift health care costs away from them and on to you. One way that many are seeking to accomplish this is to gain some form of “spousal exclusion or restriction”.
Long before the Great Recession of 2008 the US economy was forever transformed by the rise of the household with two working spouses. Unlike the generation of your grandparents and maybe even your parents, households containing two working spouses is now the overwhelming norm.
It is also the norm for employers of all types to provide health care coverage to their employees. Health care is such an important benefit for workers that both federal and state lawmakers have passed laws that regulate both health care providers and employer coverages.
The laws that govern health care and pension plans prohibit employers from discriminating amongst its employees in regard to the provision and uniformity of coverage. This has ensured that both female and male employees must be offered the same types and levels of health insurance coverage.
As such, in most cases both spouses of a household have the ability to secure health care coverage from their employer. If this has not been the case, it will be now as the Affordable Care Act requires all employers (except tiny ones), beginning in 2014, to either provide health care coverage to all of its employees or face a costly surcharge.
With health care to be all but guaranteed to every worker, employers have found a new way in their never ending quest to attack rising health care costs. The new concept at our collective bargaining tables is “Spousal Exclusion” or “Spousal Carve-Out”.
Spousal policies and the proposals we get for it generally take one of three (3) forms:
Fortunately the third option is not common. This saves the working spouse whose employer has a clearly inferior and/or more costly (to employee) plan than the other spouse from having to take that plan in lieu of the spouse’s better plan. This sort of exclusion results in a considerable savings to the spouse’s employer, because there is one less body to cover.
The second option is more common and less harsh than complete exclusion. By requiring a spouse to enroll in his or her own plan, the other spouse’s employer saves money because it is only responsible for “secondary coverage” to the excluded spouse. Per this method the secondary employer derives its savings from the fact that it does not pay anything until the deductibles and out-of-pocket maximums are reached under its own (now secondary) plan.
The most common type of spousal exclusion is the system that at the outset excludes all working spouses who have coverage opportunities from their employer. Then it permits such excluded spouse to “buy” back into his or her spouse’s coverage by paying a monthly surcharge.
The size of the spousal surcharge will normally determine the effectiveness and amount of savings for the primary employer. To influence employee behavior such charges must be significant, but if too significant the employer runs the risk of alienating good employees who will not appreciate such charges and the ultimate erosion of income that such a concept entails.
Do working spouse provisions result in significant savings to employers? You bet they do. The only question is how much.
In a family plan the two bodies that will almost always cost the most are the husband and wife. They are now, or will become, of the age when they will incur the procedures and take the medication that are most costly to insurers.
While everyone thinks that children eat up health care costs, their multiple visits to the doctor’s office for the ear infection and their antibiotics are relatively cheap. Normally they are not hospitalized and they are not forced to take expensive maintenance prescriptions.
Eliminating one-half of the costly spouse factor will necessarily lower both the “claims” experience and “cost per employee” factors of insurance costs. While it may be difficult to identify the exact savings each employer will experience, it is easy to recognize that savings will occur.
The statistics show that spousal restrictions are a rapidly growing component of public sector health plans in Ohio. In every major type of jurisdiction reported by SERB, except counties, the percentage having spousal restrictions has increased significantly. According to SERB’s 2012 Health Care Survey, from 2011 to 2012 the percentage for cities in Ohio, the percentage jumped from 18.7% to 50%.
I believe that more and more of your employers will try to implement spousal exclusion provisions. If they are of the type that allows for a reasonably affordable buy-in they are difficult to argue against, although we still do!
The best response to this issue is to identify and quantity the value of savings afforded the employer and then seek to obtain and add as much of that value back to the revenue side, in the form of wages or lower or less health care costs for everyone else on the plan.
Spousal exclusion is not the only new concept that employers are proposing at current contract negotiations. More than ever we are seeing “wellness plans” that, through employee participation, can result in either higher or lower costs for the employee.
Most wellness plans require commitments, by the employee and sometimes the spouse, to complete certain metrics testing and/or conform to certain behavioral changes. Employees may be required to regularly measure their blood pressure or cholesterol levels. Some plans may require that employees engage in positive lifestyle behaviors like exercising or stopping smoking.
Employees who participate in wellness programs are normally provided some thing of value in exchange for their participation. Usually it is a break in their monthly employee health care contribution. This is called the “carrot” approach.
Some employers, though, insist to employ the opposite approach known as the “stick” method. The stick method raises costs for workers who refuse to participate, who do not take action to improve their measured metrics or who continue to engage in risky health behaviors such as smoking.
There really is not much of fight in regard to wellness plans. They generally fall into that rare event known as a “win-win” situation.
At this stage of history though, it sure seems that there is not much else we can “win” when it comes to health care.