The Communications Workers of America (CWA)/International Brotherhood of Electrical Workers (IBEW) vs. Verizon labor dispute is heavily focused on healthcare costs. Verizon health insurance is very good coverage with minimal direct from the paycheck employee contributions. From Fierce Telecom:
Verizon said that the cost of medical coverage for an East employee and one or more family members currently averages nearly $20,000 a year. In one of the company’s East plans, the annual cost for this coverage is over $23,000 a year. The company said these costs are higher than the national average for family healthcare coverage of about $16,800.
Verizon is most likely trying to get under the Cadillac tax line as well as minimize their actual cash outflow. The unions like their benefits, but for most union members they are probably over-insured. Is there a path that makes significant welfare improvements for everyone?
What if there was an agreement zone where Verizon and all union members are either kept whole or made better off?
This would work by having Verizon maintain the current contribution to employee health care costs. This contribution would increase at some pre-defined rate that should be sufficient to pay for the current benefit package. Verizon gets some more predictability and probably lower net compensation costs after the mechanism that I describe goes into play.
What does the union get?
More choices. The base choice would be the same benefit package (platinum or better) with the same basic set of networks and no gatekeeper restrictions. The Verizon contribution is sufficient to cover this. However for most union members and their families, broad network PPOs with almost no cost sharing is too much coverage if there is a way for them to access the savings. There would be two (or more) other choices. The first other choice would be for a similar benefit package with a narrower network (it can still be a PPO, but more likely an EPO). I know most major insurers can slice and dice their network to give 80% of the providers at a 10% to 15% discount. The acturial value of the package would be the same, but there would be some limits on who the union members can see. The other package or sets of packages could be slightly higher cost sharing (Gold or Gold Plus (80% to 85% actuarial value) on either the broadest network or the slightly narrower networks.
The union benefit is cash. The union member would receive 70% of difference in cost between the cheaper plans and the baseline plan as a paycheck bump at the end of each month. 15% of the difference would go into a reserve fund for the entire bargaining unit for members who have catastrophic incidents, and 15% would go back to Verizon as a gain share. If the reserve fund is more than 20% of the difference accumulated over two or more years, all union members get a bonus check.
No one is worse off behind the veil of ignorance. Some people will be no worse off as they keep their current plan. Some people will be better off as their current choice of insurance is either too much insurance or nothing, now they can decrease the amount of insurance that they want and get cash instead, and Verizon’s health care costs would grow no faster than they otherwise would, all else being equal while having a high probability of being a bit lower than currently projected.
What are the flaws in this idea?
Cervantes
Did they quote you correctly in that article?
SiubhanDuinne
Richard, how nice to see the shoutout to you (and Balloon Juice) in the LATimes! Congratulations!
Richard Mayhew
@Cervantes: Besides replacing “shitty” with [crummy], yes they did.
burnspbesq
Health insurance costs have always been a major issue between the CWA and the telcos. One of Verizon’s corporate predecessors in interest took a very long strike over this issue in 1989. It was a major issue in a CWA strike against New York Telephone in 1965 (my dad, then a third-level manager, climbed poles in Bed-Stuy during that strike in order to replace cable that the local kids were harvesting to make stickball bats).
In both of those prior strikes, the union came out very close to whole. Not sure whether that’s likely to happen this time.
ETA: The only significant flaw in your proposal is that neither side gets to say that it made the other side capitulate. And that may make it a hard sell to the union rank and file.
Elizabelle
The Michael Hiltzik column showed up in my Facebook feed today. What a thrill to see you in it!
(And Obamacare continues to deliver, in myriad ways.)
LA Times: Another benefit of Obamacare you probably didn’t know about
Woo hoo!
Cervantes
@Richard Mayhew:
!
And it was nice work on your part, too. Thanks.
Elizabelle
@Richard Mayhew: Linky?
Richard Mayhew
@Elizabelle: You have the LA Times link; is there another link you are looking for?
Elizabelle
@Richard Mayhew: Where did you say “shitty”? Was it a telecon? I’d assumed Hiltzik might have seen a blogpost of yours …
Anyway, I love Michael Hiltzik’s reporting/columnage, and good to see you getting a nod.
Cervantes
Before that, let me ask: Is it on the table?
Richard Mayhew
@Elizabelle: Yep, it was from the previous post I wrote:
balloon-juice.com/2015/08/03/labor-capital-disputes-and-the-aca/
where the following line was replaced:
Someone whose daughter needs chemotherarapy next week will push leadership to take a shitty deal far faster than someone whose kids eventually need to go in and get their teeth cleaned.
with
Someone whose daughter needs chemotherarapy next week will push leadership to take a [crummy] deal far faster than someone whose kids eventually need to go in and get their teeth cleaned.
And given that Mike has to get his article past an editor who does not want to hear from 77 pissed off grandmothers, I understand and fully endorse that decision on his part.
Richard Mayhew
@Cervantes: No it is not on the table, but it is a possible solution space where everyone gets a piece of the pie so if the dispute is about economics, it should be on the table. If the dispute is about who has a bigger dick, then it definitely won’t be on the table.
Cervantes
@Richard Mayhew:
Perhaps you could point that out in the post above — in case your being quoted in the newspaper article leads anyone here today.
Central Planning
@burnspbesq:
While I heave never been part of a union, both my parents were (Education and healthcare). I can understand why both sides feel the need to show their constituents that they stuck it to the other side, but if both sides can stay they got what they wanted, maybe they would be able to work together better in the future.
Yeah, I know, unicorns and rainbows…
MomSense
Glad to see you getting some recognition.
jo6pac
O/T RM this is a supplemental insurance for those of us on Medi-Care. It’s in Calif and AZ only for those of you that might need it.
legacy.scanhealthplan.com/
That’s a good thingy on recognition hopefully sent some $$$ your way. Thanks for all of your time on this subject.
terraformer
Richard, question for you. My father recently passed away and my Mother is now temporarily living with us in a different state (WI to her FL). She is 75, and within the next 3-5 months, she will move in with us permanently in WI. Currently, she is enrolled in Florida Health Care Plans (that’s what it’s called). She called them to ask what she should do in terms of getting a health care plan in WI, and the person at FHCP told her (I kid you not): “you should call the Chamber of Commerce” (in WI presumably). Can you tell me what her options are? What does someone in this situation do in terms of getting a health care plan that suits her needs? TIA.
japa21
@terraformer: FHCP is BC/Anthem. She probably has a Medicare Advantage plan, or a Medicare Supplement plan from them.
I believe she can go to the Medicare website and they have a listing of Medicare Advantage plans in your area. Or she can go and have basic Medicare. Lots of looking at benefit structures, etc.
mike with a mic
wsmv.com/story/29717483/active-shooter-reported-at-antioch-theater
Someone shot up another movie.
F
OT: Head of Rand Paul’s SuperPAC and two others indicted for attempting to buy an Iowa state senator’s endorsement in 2012
motherjones.com/politics/2015/08/3-rand-paul-associates-indicted-kent-sorenson
Mike J
@mike with a mic: Trainwreck is laying there, but only one show a day at 9:30.
japa21
@Mike J:
Metro police spokesman Don Aaron said the suspect entered the theater armed with a gun and a hatchet. The shooting began in the projection room during a showing of Mad Max: Fury Road.
Read more: wsmv.com/story/29717483/active-shooter-reported-at-antioch-theater#ixzz3hyG5jriN
A gun and a hatchet. Mad Max: Fury road. Sounds about right.
RSA
I’m no expert, but it sounds good to me. Not too hard to explain to people who have to make the decisions, either: “You can keep your plan, or you can trade it in for one with more restrictions and get cash in return.” The first point gets at people who love their doctors and don’t want to change.
The only potential difficulties I can see have to do with (a) irrationality on either side in negotiation about the agreement, and (b) the cash amount being too small to overcome people’s resistance to change, and the overall savings being smaller than the cost of implementing the new system (though I don’t know how expensive the latter is).
Mike J
@japa21: The last shooting was during a showing a Trainwreck, and was done by a guy who hates feminists. The Mad Max movie has also been criticized for being “too feminist.” Of course there’s no info yet on motive.
Odd that the shooting started in the projection booth. Also odd that he would shoot up an afternoon show, which would typically have fewer people.
Morat20
Random why healthcare sucks in America fact of the day:
Vimovo. It’s a drug marketed for people who need to take a NSAID but have stomach problems doing so. Cost? 1500 dollars a month.
It’s Aleve and Nexium. I’m not kidding. 500mg of Aleve + 20mg of Nexium. Take it twice a day. 1500 dollars. A combination doctors have been giving out for years, that’s been studied. The people who make it just stuck them in one pill, named it, and charged 1500 dollars for a month’s supply.
I was prescribed it once, by a doctor who was shocked to find out what it cost. My insurance, quite rightly for once, won’t cover it. Many will, at 60 bucks or whatever for ‘non-generic, highest tier’ drugs. I doubt they pay 1500 to the makers, but even if all they paid was the 60 bucks they charged the customer via copay, it’d be 10 or 20 bucks a month of sheer, ballsy profit.
Right there? What’s wrong with American healthcare.
maeve
If it goes like at my workplace (which is self-insured managed by Blue Cross/Blue Sheild – large employer spread across a large state). It is limited network but if you live in a rural location w/out enough network providers you are designated “out of network” and the network reimbursement percentage applies.
There was a 3 tier plan – bronze, silver, platinum(or gold, whatever)
After a few years they discovered that (surprise!) only the people who really needed to use it opted for the high level plan and therefore, despite their higher contributions, it was costing money. So they eliminated it. That pre-dated ACA.
Now we have 3 plans (high deductable, consumer-directed with health savings plan, silver) plus contributions now depend on number of dependents (1, 2, 3 or more). There are few enough employees with more than 3 children it was not worth splitting it out any further. Plus if spouse has other coverage they are required to use it.
We also have a wellness program where you can get a $600 annual rebate on your contributions for various activities.
So in this case Verizon may fix the cost but then employees who opt for/need the higher level plan will find they need to contribute more. (Which I can’t totally disagree with as long as there are limits).
p.a.
From Wikipedia:
The value of my health insurance from 2014 W2 $8,592 Anthem BlX single no dependents $660/yr premium ($1,300 if I smoke), $1,000 deductible, $20 Office $25 Specialist, $75 ER. I’m a RI resident, so NYC & Boston value of comparable coverage may be higher. During November signup I only had 2 other options, all about the same. If I retain this level of coverage, given health ins. inflation (?%/year) would I (or Vz) really be in danger of Cadillac Tax in 2 1/2 to 3 years?
cckids
@Mike J:
That was my thought too. Not to mention, Fury Road has been out for what, 2 months? Not a huge draw any more.
Possibly a personal vendetta against one person? Or overly-involved suicide by cop??
Mary G
What, your name isn’t really Richard Mayhew?
Seriously, congrats on being read by Michael Hiltzik. We can say we knew you when.
boatboy_srq
@Elizabelle: INDEED! Congrats, sir.
gene108
My brother works for a bank in NYC.
When they switched plan types, at the start of last year, in order to become PPACA compliant, they switched everyone to high deductible plans, which are HSA eligible.
They had different tiers of benefits, depending on what you made.
The lower paid people had a greater share of their HSA funded by the company, and this phased out as you went up the income pay grades.
I thought it was a nice way to get out of having the insurance carrier pay the first dollar* of expenses, be PPACA compliant, and avoid the Cadillac plan tax, while maintaining decent benefits for your employees.
* Insurance companies seem to spend a fair bit of time figuring out how people behave. If you only have a $10 co-pay and the insurance pays the rest, after that, they figure you will be more likely to use your insurance and they will have to pay more in claims, i.e. they are on the hook for the “first dollar” paid to the provider. Carriers have been “gently” nudging employers to push more of this first dollar expense onto users, because otherwise they can’t reduce the 25% premium increase to a more manageable 10% increase.
JPL
Richard, Although, I don’t comment often, I enjoy all your posts.
elmo
Immediate flaw that I can see: If the delta is returned to the employees in their paycheck, it becomes taxable to both the employee and the employer. Even if it’s a small amount, the aggregate increase in taxation can be a deal-breaker in a union bargaining session characterized by pennies.
Omnes Omnibus
OT: This is a fairly big thing. The Fourth Circuit just ruled that warrantless searches of cell site location info violates 4th Amendment. Link.
burnspbesq
@Omnes Omnibus:
Big deal going forward, but the defendants in this case still go to jail because the Gubmint acted in good faith in procuring the data without a warrant.
Richard Mayhew
@elmo: Agreed, I don’t know exactly how this would work out, but the contours of a deal are possible depending on how many pennies are possible …
But I would think the union could potentially be happy as their members can either keep their health plan and their same level of pay OR downgrade their health plan a little bit and get a slightly larger after taxes paycheck.
It is not a sure thing, but it is part of a possibility space.
Richard Mayhew
@Mary G: He’s been reading and quoting me for well over a year now.
Cervantes
@Mary G:
@Richard Mayhew:
As seen here, more or less.
Elizabelle
@Richard Mayhew: More proof Mr. Hiltzik lives in the real world.
Great to hear. I’d missed some of the earlier posts.
FWIW, I also really like Jim Tankersley of the Washington Post (maybe originally with the National Journal). He’s done some wonderful reporting on the economy and the middle class.