UAW Local 1975 Members

Healthcare Analysis for
UAW Local 1975 Members
EMU-AAUP
July 6, 2012
1
Roadmap
• Current healthcare situation for UAW 1975
members
• Administration proposal
• Changes
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Premiums
Deductibles
Co-Insurance
Copays
• Is the administration proposal a pay cut for
UAW 1975 members?
2
Current Situation
• EMU is a self-insured employer. This means that EMU
pays:
 An administrative fee for each member to Blue Cross
 A stop-loss fee for each subscriber to Blue Cross.
 All claims to doctors and hospitals; the payments are
claims are limited to the stop loss amount ($350,000).
Therefore, all claims up to 350k are paid by EMU, and any
claim that is more than $350k is covered by Blue Cross
• The amount paid by employees reduces what EMU has
to pay.
• Health care is calendar based: Any new items will take
effect starting January 1, 2013
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How Employees Pay for Healthcare
• Premiums
• Deductibles
• Co-insurance
• Co-pays
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• Currently, you have PPO 1 or PPO 2:
• PPO = Preferred Provider Organization,
where you can select a doctor/specialist
without going through a gatekeeper (HMO’s
have PCP’s or primary care physicians)
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Premiums
• Employees pay this up front, and this is paid whether you use the
medical system or not. Until the mid-2000’s, EMU employees did
not pay any premiums
• PPO 1: ZERO
• PPO 2 paid
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$960 per year if single
$1,404 per year for all others
• This amount is taken out of each check, and comes out “pre-tax”
(see appendix for an explanation of pre-tax)
• Administration proposal for 2013 (we will discuss 2014 and 2015
later)
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$624 single
$1,260 2-person
$1,500 3 or 4-person
$1,752 family with 5 or more people
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Deductibles
• A deductible is the amount of money you must pay
each year before EMU starts to pay.
• There are certain items, per the Affordable Care Act,
that deductibles, co-insurance, or copayments do not
apply to. These are preventative services at
http://www.healthcare.gov/news/factsheets/2010/07/
preventive-services-list.html and in the Appendixes
• This applies only when these services are delivered by
a network provider.
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Deductible Amounts
• PPO 1
 $250 Single
 $500 Family
• PPO 2
 $0 Single
 $0 Family
• PPO 5 (Administration proposal)
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S250 Single
$750 Two-Person
$750 Family (3 or 4 people)
$750 Family Plus (5 or more people)
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Co-Insurance
• A cost-sharing requirement where you are responsible
for paying a certain percentage and EMU will then pay
the remaining percentage of the covered medical
expenses after your deductible is met.
• PPO 1 and PPO 5 are 90/10 plans, meaning the coinsurance percentage is 10%
• However, there are certain items that are 100% covered, and
certain covered at less than/differently 90%
 Private duty nursing 50%
 Chiropractic is limited to 24 visits per year at $15 co-pay
per visit; was $0 co=pay and 24 visits
 PT, OT limited to 60 visits per year, same as before.
However, you now pay 10% of the costs; paid zero before
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Co-Insurance Maximum Amounts
• PPO 1
 $500 Single
 $1,000 Family
• PPO 2: Zero
• PPO 5 (Administration proposal)
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S1,000 Single
$2,000 Two-Person
$2,000 Family (3 or 4 people)
$2,000 Family Plus (5 or more people)
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Example of How Deductibles and CoInsurance Works
• Let’s say you (2-person unit) get a heart
surgery that costs $100,000
 You pay the $750 deductible
 You pay $2,000 co-insurance. Why? 10% of
$100,000 is $10,000. Your deductible of $750
goes first, then you are potentially on the hook
for the remaining $99,250.. However, the
maximum co-insurance amount is $2,000
 Total paid = $2,750
 Under PPO 2, you would have paid zero
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Co-Payments
• A specific flat fee you pay for each medical
service, such as $20 for an office visit, after
which EMU pays the remainder of the covered
medical charges
• There are co-pays for prescription drugs
• There are co-pays for emergency room visits
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Co-Payment Amounts
• PPO 1 and PPO 2
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$15 for office visits
$10/$20/$30 for prescription drugs
$20/$40/$60 for 90-day Mail order drugs
$50 emergency room waived if admitted or for
accidental injury
• PPO 5 (administration proposal)
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$20 for office visits
$5/$25/$50 for prescription drugs
$12.50/$62.50/$150 for 90-day Mail order
$50 emergency room waived if admitted or for
accidental injury
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Co-Payment Example
• Let’s say you are not feeling well and went to see
your doctor who charges $200 for the office visit.
You will pay the $20 co-pay, as office visits are not
subject to the deductible or 10% co-insurance. EMU
will pay the rest of the $180 cost.
• The intention of a co-pay is to get dollars from the
employee, and also to prevent people from seeking
care for every trivial medical condition they might
encounter. However, given the large additional
overall costs, it could encourage people to forego
needed medical care.
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Analysis of 2013 Extra Out of Pocket Costs for PPO 2
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Additional Costs in Context
• The administration is asking members with large families to pay 14%
of their income on healthcare
• If President Martin had to pay 14% of her income on healthcare, she
would pay almost $45,000 in health care costs
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Analysis of 2013 Extra Out of Pocket Costs for PPO 1
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Discussion of Additional Out of Pocket Costs
• The marginal costs for the premiums in 2013 are definitive
• For the deductible, most people will hit the maximum
deductible. Though many procedures/visits are covered at
100% with no deductible, many procedures are not (lab
services, x-rays, delivery/nurse care, hospital care,
chemotherapy, surgery, inpatient mental health care,
diabetes supplies, OT/PT
• With co-insurance, not everyone will reach this. However,
one significant medical procedure (surgery, which is not
100% covered) will mean the co-insurance max is reached.
• It is very likely that given the amounts involved, many
people will forego needed medical care. These are choices
that should not have to be made.
• Note that only 10% of the unit is currently on PPO 1;
therefore, the PPO 2 amounts will affect most members.
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Summary of 2013 Changes
• Most members will suffer significant pay cuts under this proposal
• The $1,250 is not sufficient to cover the additional costs of most members
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Further Discussion of 2013 Changes
• It should be the case that nobody gets a pay cut
• If the administration is going to impose these
additional costs, then the dollar amount to cover
these should ensure that nobody receives a pay
cut.
• Therefore, the flat dollar amount to base on
1/1/2013 should not be $1,250, but should be at
least $3,198, or roughly $2,000 more than is
being proposed.
• For those who opt out (2% of the unit), the
$1,200 payment has been eliminated
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2014 and 2015
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Discussion of 2014 and 2015 Changes
• The administration is proposing that premiums
increase 12% per year, and total costs about 4-5% per
year.
• Consider the fact that health care inflation has
averaged 3.3% for the last FIVE years. Sources:
http://www.forecast-chart.com/inflation-medical-care-cost.html and Wall Street
Journal, 7/5/2012
• Health care costs are forecasted to increase 2-4% per year
for the next several years
• Increasing premiums by 12% is completely contrary to all
empirical evidence.
• Any marginal dollar increase in 2014 and 2015 should be
covered by a flat dollar amount in those years. The flat
dollar amount should be added to the percentage across
the board raise that is negotiated.
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Other Plans Being Offered: HMO’s
• HMO Enhanced
 Premiums are smaller, at $120 to $360 per year
 Out of pocket maximums are $1,500/$3,000
(single/family)
 These are larger, and will likely be hit, as coinsurance rate is mostly 20% some at 50% (allergy
testing)
• HMO Standard
 Premiums are smaller, at $120 to $360 per year
 Out of pocket max is $3,000/$6,000 (don’t get sick)
 Co-insurance rate starts at 30% and up to 50%
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Health Savings Account
• HSA (Health Savings Account)
 Premiums of $360 to $1,080
 Out of pocket max is $2,500/$5,000
 EMU gives back $500/$1,000 to cover the $6,080 you
may have to pay out.
 If you pay $5,080, this amounts to 15% of an average
member’s salary. This is extremely high and not
realistic.
 Co-insurance rates are 20%
• For all of these plans – they work if you are
healthy and hardly use the medical system
• They work for the healthy and wealthy
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Conclusions
• The levels of health care costs that the
membership is being asked to pay is way out of
line
• The changes in health care costs from the current
situation are way out of line. If increases are to
be paid, they should be phased in slowly
• The vast majority of the membership will realize
pay cuts under the current administration
proposal.
• This proposal should be rejected
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Appendix 1: Services for All Adults With No
Deductibles or Co-Insurance or Co-Pays
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Abdominal Aortic Aneurysm one-time screening for men of specified ages who
have ever smoked
Alcohol Misuse screening and counseling
Aspirin use for men and women of certain ages
Blood Pressure screening for all adults
Cholesterol screening for adults of certain ages or at higher risk
Colorectal Cancer screening for adults over 50
Depression screening for adults
Type 2 Diabetes screening for adults with high blood pressure
Diet counseling for adults at higher risk for chronic disease
HIV screening for all adults at higher risk
Immunization vaccines for adults--doses, recommended ages, and recommended
populations vary
Learn more about immunizations and see the latest vaccine schedules.
Obesity screening and counseling for all adults
Sexually Transmitted Infection (STI) prevention counseling for adults at higher risk
Tobacco Use screening for all adults and cessation interventions for tobacco users
Syphilis screening for all adults at higher risk
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Appendix 2: Services for Women With No
Deductibles or Co-Insurance or Co-Pays
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Anemia screening on a routine basis for pregnant women
Bacteriuria urinary tract or other infection screening for pregnant women
BRCA counseling about genetic testing for women at higher risk
Breast Cancer Mammography screenings every 1 to 2 years for women over 40
Breast Cancer Chemoprevention counseling for women at higher risk
Breastfeeding comprehensive support and counseling from trained providers, as well as access to breastfeeding supplies
Cervical Cancer screening for sexually active women
Chlamydia Infection screening for younger women and other women at higher risk
Contraception: Food and Drug Administration-approved contraceptive methods, sterilization procedures, and patient education
and counseling, not including abortifacient drugs*
Domestic and interpersonal violence screening and counseling for all women*
Folic Acid supplements for women who may become pregnant
Gestational diabetes screening for women 24 to 28 weeks pregnant and those at high risk of developing gestational diabetes*
Gonorrhea screening for all women at higher risk
Hepatitis B screening for pregnant women at their first prenatal visit
Human Immunodeficiency Virus (HIV) screening and counseling for sexually active women*
Human Papillomavirus (HPV) DNA Test: high risk HPV DNA testing every three years for women with normal cytology results
who are 30 or older*
Osteoporosis screening for women over age 60 depending on risk factors
Rh Incompatibility screening for all pregnant women and follow-up testing for women at higher risk
Tobacco Use screening and interventions for all women, and expanded counseling for pregnant tobacco users
Sexually Transmitted Infections (STI) counseling for sexually active women*
Syphilis screening for all pregnant women or other women at increased risk
Well-woman visits to obtain recommended preventive services for women under 65*
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Appendix 3: Services for Children With No
Deductibles or Co-Insurance or Co-Pays
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Alcohol and Drug Use assessments for adolescents
Autism screening for children at 18 and 24 months
Behavioral assessments for children of all ages
Ages: 0 to 11 months, 1 to 4 years, 5 to 10 years, 11 to 14 years, 15 to 17 years.
Blood Pressure screening for children
Ages: 0 to 11 months, 1 to 4 years, 5 to 10 years, 11 to 14 years, 15 to 17 years.
Cervical Dysplasia screening for sexually active females
Congenital Hypothyroidism screening for newborns
Depression screening for adolescents
Developmental screening for children under age 3, and surveillance throughout childhood
Dyslipidemia screening for children at higher risk of lipid disorders
Ages: 1 to 4 years, 5 to 10 years, 11 to 14 years, 15 to 17 years.
Fluoride Chemoprevention supplements for children without fluoride in their water source
Gonorrhea preventive medication for the eyes of all newborns
Hearing screening for all newborns
Height, Weight and Body Mass Index measurements for children
Ages: 0 to 11 months, 1 to 4 years, 5 to 10 years, 11 to 14 years, 15 to 17 years.
Hematocrit or Hemoglobin screening for children
Hemoglobinopathies or sickle cell screening for newborns
HIV screening for adolescents at higher risk
Immunization vaccines for children from birth to age 18 —doses, recommended ages, and recommended populations vary:
Learn more about immunizations and see the latest vaccine schedules.
Iron supplements for children ages 6 to 12 months at risk for anemia
Lead screening for children at risk of exposure
Medical History for all children throughout development
Ages: 0 to 11 months, 1 to 4 years, 5 to 10 years, 11 to 14 years, 15 to 17 years.
Obesity screening and counseling
Oral Health risk assessment for young children
Ages: 0 to 11 months, 1 to 4 years, 5 to 10 years.
Phenylketonuria (PKU) screening for this genetic disorder in newborns
Sexually Transmitted Infection (STI) prevention counseling and screening for adolescents at higher risk
Tuberculin testing for children at higher risk of tuberculosis
Ages: 0 to 11 months, 1 to 4 years, 5 to 10 years, 11 to 14 years, 15 to 17 years.
Vision screening for all children
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Appendix 4: What Does Pre-Tax Mean?
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Sample family with $34,000 of income, $1,400 of premiums, 15% tax rate, 3 exemptions
• Consider two options; taking premiums out pre-tax or paying premiums in cash
• The pre-tax option increases your after-tax take home by $210
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