Transparency, Health Care Costs Continue to be Priorities

At the start of the New Year, we predicted that health care would be the “Issue of 2013.” Less than half way through the year, our prediction came true. As part of our efforts through the Public Employee Committee’s (PEC) Labor Management Committee on Health and Wellness, Local 21 has been at the forefront of fighting for transparent, accountable active and retiree health care on multiple fronts. 

Retiree Health Slated for 2013 Ballot

PEC representatives attended a recent Board of Supervisors hearing on the City’s $4.3 billion unfunded retiree healthcare liability. Following the hearing, we met with Supervisor Mark Farrell who, along with other supervisors, is interested in sponsoring a November 2013 ballot measure to reduce the $4.4 billion long-term liability. PEC leaders expressed our desire to support a measure that better safeguards the existing retiree health care trust fund, which is currently only protected from unreasonable administrative withdrawals until 2020. However, we’ll oppose anything requiring our members to pay more.

Employees hired after Jan. 9, 2009, now pay 2% toward their retiree health benefits (per 2008’s Prop. B). Beginning in 2016 (Per Prop. C, passed in 2001), employees hired before Jan. 9, 2009 will begin paying .25% toward these benefits. For pre-2009 employees only, this amount will increase by a quarter percent each year until it reaches a 1% contribution in 2019. We will not agree to pay the City a penny more, and so far City Supervisors seem agreeable to excluding additional contributions from the proposed measure.

According to a recent report by the Controller, reigning in medical premiums and inflation have a 1:9 impact on retiree healthcare liability. For every $1 we reduce premiums and inflation, we will eliminate $9 of liability. This is yet another example of why we need to address transparency and accountability in health care costs, rather than arguing with the City over who should pay more.

Legislation Key to Transparency

In an effort to promote transparency and accountability, we are working with the City and other stakeholders to leverage providers and pass legislation making it easier to pool data to track and reduce costs. Currently, basic data about costs, claims, and usage is largely proprietary information and we have no way of reconciling our skyrocketing costs with the actual care provided. We know that insurers like Kaiser, who recently posted an historic $2 billion profit last year, is trying to increase our costs with no explanation for the increase in fees and some indication that our usage of Kaiser has actually decreased. 

Two weeks ago, PEC unions including Local 21 spoke out at the HSS Board meeting and told Kaiser it is unacceptable to pad their profits at the expense of City employees and taxpayers. The HSS Board directed the health care giant to come back to the table with honest pricing that accurately reflects our utilization and not charge fees it cannot validate. Kaiser is scheduled to come back to the Board on May 23. We are preparing a campaign and press strategy to help ensure that Kaiser does not get away with robbery. Read more at

Changing the playing field includes collaborating peripherally with unions working on the state level, and leading our own efforts at the local level. Although in the early stages to date, this has included passing resolutions at the Health Service System Board and the San Francisco Labor Council. The Board of Supervisors is expected to pass a similar resolution this summer. We are also working on a media campaign to draw attention to these efforts and the need for addressing healthcare costs in a way that focuses on the real problem – health care providers and insurers – not city employees or overly generous plans.

Finally, we are also working with the City to expand upon and improve its current Wellness program. An effective and well tailored wellness program would help reduce both the City and employees’ long term health care costs, while improving the overall health of our workforce and creating positive, early interventions to reduce the development of chronic illnesses. Our primary goals in the development of a Wellness program are to implement something that has non-punitive incentives, respects employees’ confidentiality, and integrates any cost savings we can achieve with lower premiums or some other payback to employees, as well as the City.

PEC Continues to Seek 90/10 Alternative

The PEC has been in discussions with the City on an alternative to the 90/10 healthcare split, which is scheduled to go into effect on January 1, 2014. After our 2012 negotiations, all parties realized the 90/10 plan had undesirable, unintended consequences because it was likely to cause migration of healthy people out of Blue Shield and into Kaiser. What was intended to save money would actually result in less competition and rate increases for both plans.

The PEC approached the City about delaying implementation of the 90/10 by one year until we developed a better plan, and the City has proposed an alternative structure: a 93/90/83 split. The City agrees that the 90/10, originally proposed by them, would be costly for everyone. The delay and alternative model would cost the City up to $10 million, but would save more money for the City and employees in the long run. 

We are in the process of discussing logistics and analyzing the long-term impact of the 93/90/83 plan before coming closer to any decisions. Because the plan would have implications for unions citywide, it would take a coordinated effort through the PEC to reach a final agreement. The 93/90/83 alternative would increase employees’ contributions to Kaiser premiums for some employees, but drop Blue Shield premiums across the board. The plan was modeled with the goal of maintaining competition between the plans, not causing migration, and keeping long term costs down to ensure the sustainability and health of our medical plans.

Before Local 21 and the PEC reach any agreement, we’ll have more details to share.