The One and One-Half Percent Solution?

With the Davis Administration, the expression: “We Cheat the Others and Pass the Savings on to You”; “Others” seems to have become more inclusive.

Before, the failure to negotiate adequate medical contributions was basically shifted to the non-voting retirees. Now it appears as if the Active Members may be asked to take a bite from Davis’ meager buffet.

At the San Francisco meeting the notion that Active Members would suffer a 1.5 percent “tax” on their base pay to add to the Medical Plan coffers was broached. This morning, one of the more loyal shills posted something on the Members BBS about calling “Washington” to find out about it.

Is this an effort by the Davis Administration to find out just what the Active Members are willing to accept in what amounts to a backdoor wage cut to all actives to compensate for a few low-ball contracts with high attendant liabilities?

If it is, expect this to be couched in the usual divisive “it’s cuz o’ dem pensioners and their 10 kids” terms instead of the true reason.

Davis’ recently late change to the retirees with dependents minimum may be driving this. Notice the $800 per month maximum has been rescinded, raising the specter that Davis himself may have to pay more for himself should he retire. He then drops the 2008 COLA in effect making the cap change cost neutral for himself.

What was it Davis was putting out to the Members about the MEBA Medical Plan in 2004?

Ah yes, here is a gem:

“….Bottom line is that the Medical Plan is bringing in more money than it pays out, and this will only continue because we have negotiated excellent contribution rates into every contract over the past three years”

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MEBA Medical: A Rational Appraoch

Recently, at the National Governors Association conference, former U.S. President Bill Clinton outlined some facts and ideas about healthcare in the US.

At this time we spend 16 percent of GDP on healthcare. The next two big spenders are Canada and Switzerland at 11 percent. Most other “advanced nations” spend about 9-1/2 percent. Of the total amount spent on health care in the U.S., 34 percent goes toward administrative expenses.

Obviously these costs are not sustainable and it will take a large and concerted effort to reduce this problem.

Is there something we in our little microcosm can learn and apply from this information in the here and now?

Obviously we could take all the money earned by members and paid to retirees by the pension plan and say “OK, we need 16 percent of this to cover health costs”.

However, we do not have a one-to-one ratio for billets and active members. Some sort of formula would have to be worked out between the Union and employers or coverage would have to be restricted to something closer to actual covered employment days.

For pensioners, the formula would be pretty straight forward as there are no “part-time retirees”.

Then we could look at the administrative costs and our experience. Bill Clinton characterized administrative costs as a great tug of war between people who wanted to get paid for providing services and people who did not want to pay for health costs.

If you look at administrative costs in the U.S. as costs incurred by both payer and provider and divide in half you get 17 percent. We know the MEBA Medical plan has lower costs than that, at around 10 percent. Is it reasonable to expect that providers dealing with the MEBA Plan have the same costs?

This means we could reduce the 16 percent by 14 percent which would make it 13.7 percent.

There are a few questions that should be answered while we are looking at this:

Does the per-participant cost experience parallel the national average? We know there are certain occupational health issues that come into play. Since these are incurred as part of employment, it seems reasonable to expect employers to pay for these extra costs. We should be able to determine or at least approximate these extra costs. It is also to be expected that these additional costs would be incurred later in life, among retirees therefore.

If we take out the occupational health issues does our experience still compare? If not, what can we do to bring costs in line?

How do we reconcile the differences in costs between single participants and those with dependants?

Reducing health costs is largely a matter of people leading lives that are healthier. We know that our working enviroments have improved over time. The end of asbestos insulation, safety gear, better control of chemicals and the like. What can the Plan do to encourage healthy life-style choices and even reward them?

In any case it would be a more rational approach than the one taken now where employers pay all sorts of different rates for billets and rates for retirees seem to be based on the notion that they will stop screaming below a certain point and that should be the amount they pay. And maybe while we are at it we could convince some Union Officials to worry more about doing their fiduciary duty instead of allowing the election cycle to control their actions.

From everyone to whom much has been given, much will be required; and from the one to whom much has been entrusted, even more will be demanded. (Luke 12:48)

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