Health Benefits at Risk!
There’s a probable show-down brewing between employee unions and LAUSD management over funding for employee health benefits. LAUSD school board members are slated to vote August 13th on the final budget for the 2002-2003 school year. Funding for health benefits is the #1 item on everyone’s minds.
LAUSD Chief Financial Officer Joe Zeronian recently “threw down the gauntlet” to the employee unions over funding for medical benefits. In a June 26th letter to the unions, he said that the district does not intend to fund anything in excess of $495 million for health benefits- to cover more than 108,000 active and retired employees and their families. Based on the initial responses for medical plan renewals, health benefits’ coverage for fiscal year 2002-2003 will probably cost $78 million more than the district is willing to pay. Zeronian told the unions that if they didn’t make cuts to the benefits’ plans by August 12th the district was prepared to make the cuts to the programs.
The Union strongly protested Zeronian’s threats at the July 9th school board meeting. Four of the seven current school board members are up for re-election next spring. All the board members have been saying publicly that they want employee health benefits to remain in their present form.
Health benefit cots for 2001-2002 ran about $511 million ($16 million more that the amount allocated in the union contracts). The existing health plan contracts expire December 31st, so the unions are reviewing bids for benefits providers.
The big cost increases appear to be the medical plans. The Kaiser bid jumped 21.2%. Blue Cross came in 14.5% higher. Cigna Medical increased 12.7%.
It’s a little confusing how much the funding deficit actually is. The school district funds the benefits by fiscal year, but the health benefits contracts are let by calendar year.
Tower Perrin, the outside consultants who advise the Health Benefits Committee, project that there’s a funding shortage of about $78 million of fiscal year 2002-2003. That includes the plan’s higher costs for the first six months of 2003. But the consultants project that the shortage for calendar year 2003 will skyrocket to $155.6 million if the health benefits’ plans are maintained at the current level with no employee contribution.
The health benefits funding crisis is grim. There are no easy solutions. Unless the unions can jointly bring enough pressure on the school board to divert funding form “big ticket” places like outside contractors and consultants, then employee unions will be forced to craft cuts to the health benefits plans—cuts which are the least harmful to their members. Here are some of the problems:
· An early retirement option, or “golden handshake”, would probably aggravate the health benefits problem because the early retirees are too young to use Medicare. The cost of health benefits are usually borne solely by active employees.
· Towers Perrin, the outside health benefits consultants to the Health Benefits Committee, tell us that the health insures will not underwrite an “employee only” option, or single coverage on active employees only.
· Kaiser (the current plan) now costs almost $50 a month more than the Blue Cross HMO. Most classified employees belong to the Kaiser Health plan. One option the consultants have proposed is to make the cheaper plan free (Blue Cross). Employees still enrolled in the more expensive plan would have to pay a monthly contribution ($40-$50 single; $80-$100 for 2 party: $115- $140 for family). That’s not an attractive option for the classified staff.
· “Tweaking” the existing plans- like raising co-pays by $5, implementing a financial incentive for filling prescriptions via the U.S. mail, eliminating dual coverage for spouse employees, etc. will only save a fraction of the deficit amount.
· Force the school board to find the money to fund the medical plans.
· Employees pay a monthly contribution, combined with medical plan changes such as higher co-pays. How much? We don’t know jet. We urge you to get prepared for a giant demonstration by all the employee unions in LAUSD.
Get prepared to come. We’ll send out details via email as we know them. We hope to send out a mailing- to Teamsters site reps only- with detailed information. This is what you need to do now:
· Order a Teamster tee shirt (details below). Each union has a different color.
· Get on our email alert list. Send your email address to www.teamsters572.org
· If your site doesn’t have Teamsters Site Rep, then volunteer now! Fax us the contact information to (310) 515-0942
“District employees are only entitled to
an adequate health plan.” Remarks
attributed to Gov. Roy Romer at July
9th School board meeting.
Get ready for the next union rally to save your health benefits!
You can order Teamsters tee shirts for $10.00 by calling (310) 515-0601 Ext. 34 leave a message, with name-location, phone #, and size.