Deal on health premiums?

STATE WORKERS: Tentative agreement calls for 85/15 cost split - not 74/26

December 4, 2010 

State policymakers have been planning on shifting to a "user pays" proposal making it cost more to hunt, fish, camp and develop land or water crops.

BY STEVE BLOOM — The Olympian

Negotiators for Gov. Chris Gregoire and 25 public-sector labor unions have agreed to increase the workers' share of health care premiums by more than 25 percent in 2012 and 2013.

Under a contract deal reached late Thursday, the employees’ share of premiums would go to 15 percent in 2012 – up from the 12 percent of recent years. But elements of the deal could require legislative approval, and unions won’t vote to ratify the contract element until negotiations are done on compensation and other pieces of the state-worker contracts for 2011-13.

That might not happen until January or later.

“This is a big step. It allows the governor to put it in her budget and allows it to go forward to the Legislature,’’ Washington Federation of State Employees spokesman Tim Welch said Friday, adding that the federation would go “arm in arm” with the governor in pushing lawmakers for approval of law changes the federation believes are needed to allow use of health care reserves.

Gregoire is expected to roll out her two-year budget plan after Dec. 13 to close an estimated $5.7 billion budget gap. A key part of the health care agreement is use of about $37 million in reserves from two Public Employees Benefits Board accounts, which limits impact on the state’s general fund.

The agreement also hits employees’ paychecks. But it will be at a lower rate than the 26 percent worker share of premiums that Gregoire had proposed earlier this year. So Welch called it a bittersweet agreement for the 40,000 workers represented by his union.

The agreement applies to 25 unions, and the state’s cash contribution will cover 85 percent of premiums – even if inflation drives up costs, according to Glenn Kuper, spokesman for the governor’s Office of Financial Management.

This means the state would continue contributing $850 per month, on average, for each employee for health, life, dental and disability-related insurance benefits.

But Kuper said that state contribution could go up if inflation is higher than expected.

Gregoire had proposed the higher worker share of premiums, but Kuper said new estimates of health costs were lower than previously assumed. That’s because a spike in employee use of health care seen in 2009 has leveled off.

“It means it’s less expensive. Because it’s being used less, it costs us less to provide the coverage. That is a big chunk of how we were able to bring (down) the amount employees would have to pay,” Kuper said.

Even so, the health care benefits package is expected to cost taxpayers about $2.4 billion over the contract life – roughly what the state is paying in the 2009-11 biennium for the employee health benefits through the state Public Employees Benefits Board system, Kuper said. PEBB serves about 335,000 employees, dependents and retirees, and more than half use the state-run Uniform Medical Plan.

Welch said it is too early to say what the new 85/15 split will mean in terms of monthly premiums for workers. But the state Health Care Authority estimated earlier this year that UMP members are already paying $86.50 a month, on average, for insurance and another $840 per year for out-of-pocket medical and pharmacy costs in 2010.

Under existing contracts, worker health premiums go up next year by as much as 46 percent for the full-family UMP option, which goes from about $123 a month to $175 in January. Other plans and options have different changes, and some plan costs are not going up.

Welch said full-family coverage under UMP would have shot up to $425 per month or $5,100 a year for workers under Gregoire’s first 26 percent proposal.

But workers facing increases are absorbing the costs at a time many also are losing almost 5 percent of their pay due to monthly furloughs. And Gregoire’s negotiators are hoping to start talks next week on payroll reductions that could be equivalent to 2.5 percent of pay starting in January – part of reopening contracts for 2009-11.

Welch said the federation expects the governor to see payroll concessions for both contract periods – through June 2011 and through June 2013.

Despite the union’s complaint, the expected workers’ premiums are lower than what many private sector employees pay. Some surveys have suggested the worker share – public or private – is much higher nationally.

A survey released in September by the Kaiser Family Foundation showed that workers across the country are paying almost $4,000 in 2010 for premiums and out-of-pocket health care costs. That’s about $482 a year more than they paid in 2009, a 14 percent increase in a single year, the survey showed.

Other data collected by the National Conference of State Legislatures in Denver showed that public employees’ share of health insurance costs held steady from 2006 to 2009, on average, nationally. But the overall trend for most states is to put more health-cost burdens onto workers over time – whether through premiums or through shared costs such as co-pays and deductibles, NCSL health expert Dick Cauchi said earlier this year.

In fact, NCSL data showed that the 12.3 percent share of insurance costs paid by Washington workers for full-family coverage in 2009 was lower than the average 18 percent paid by workers in other states that year. Washington workers also paid less than 5 percent for individual coverage compared with an average of nearly 8 percent in 47 states NCSL surveyed.

“The cost for our members will go up. Unless a miracle happens, it’s more than 25 percent” in 2012, Welch said.

But Welch said he expects employees to understand the situation and vote for it – if a full contract for 2011-13 is hammered out. “We’ve had about three months to talk about 74/26 and what they would be willing to accept. I feel confident from the feedback we’ve gotten that this is a level they would accept,’’ he said.

Actual voting on the health benefits could wait until next year. That is because the ratification of the 2011-13 contract by unionized workers must await the completion of other contract elements that deal with compensation and working conditions, and those could go on for a few more weeks. Different unions are at different places in that process.

There is one possible glitch. If the unions and the state cannot agree on master contracts for 2011-13, workers would be covered by existing contracts through June 2012. At that point, the state could impose new terms.

Brad Shannon: 360-753-1688

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