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VOL. 15, NO. 5

NEWS

Concern mounts with health care crisis

BY ERIK ALSGAARDUMCONNECTION STAFF

The skyrocketing cost of health insurance continues to plague the Baltimore-Washington Conference as members of the Pensions and Health Benefits Committee search for ways to cut costs and still offer a viable plan.

Were going to have to do a combination of things again this year, said Frank Gould of Centenary UMC in Shady Side, chair of a medical sub-committee looking at options for the health plan. There are some very difficult decisions that must be made in the near future. We have to make changes in the plan to save $1 million in claims.

Even with that savings, Gould said, the full committee of Pensions and Health Benefits is projecting a 35 percent increase in premiums for 2005.

Some of the changes recently approved by the full committee include increasing co-payments for doctors visits and the use of emergency rooms, and an increase in deductibles and out of pocket expenses.

The entire slate of changes will come before the annual conference in May for its perfection. However, under a policy approved last year, the annual conference gave the Pensions and Health Benefits Committee authority to make changes as needed.

The last time co-pays for these services were raised was in 1996, said Carole Chaloner Silberhorn, executive director of the pensions and health benefits office.

With the current plan, for example, participants who visit their primary care physician, or PCP, pay $15. With proposed changes, co-pays would rise to $25 and reduce the over-all cost of the health plan by more than $136,000.

More money would be saved under a proposal to increase prescription drug co-pays. Currently there is no annual deductible for prescription drugs. Increasing that to $100, along with a modest increase in co-pays, could save more than $320,000. Increasing the deductible to $250 could save an additional $180,000. Co-pays on prescription drugs were last raised two years ago.

Everything is on the table, said Gould, including dropping the PPO plan.

Currently, the conference health insurance plan offers two options: PPO Plus and PPO. About 10 percent of the more than 1,500 plan participants are in PPO, which allows greater flexibility in visiting doctors and specialists who are not in the CIGNA health insurance network.

The full committee, chaired by the Rev. Dan Wright, voted to freeze enrollment in the PPO plan effective Jan. 1, 2005, and eliminate the PPO plan Jan. 1, 2006.

Thats a difficult decision, Wright said.

The conference has been insured with CIGNA for the past two years, said Silberhorn. She is working closely with CIGNA to develop plan changes and proposals.

At issue is the projected $7.42 million income needed to cover plan expenses for 2004, and the $8.4 million expense projected for 2005. This includes medical expenses, such as hospital stays and doctors office visits, prescription drugs and dental coverage.

The conference is a self-insured group, said Silberhorn. The income from plan participants must cover the expenses incurred by the participants.

These proposed changes follow hefty premium increases this year. The annual conference voted last year to increase premiums 15 percent, and mandated that plan participants pay 10 percent of their premiums, including retired clergy.

Even so, said Silberhorn, if the conference did nothing to reduce benefits, the projected cost of medical premiums would need to rise 53 percent next year to cover costs, including allocating money to replenish a reserve fund almost totally depleted.

Another factor in the equation is the fact that new money will be needed in 2005 to replenish nearly depleted reserves. Currently, the claims stabilization fund has about $1 million, Silberhorn said. We should have $3 million in this fund, or six months worth of current claims. That amount, she added, will have to grow in the future as the average dollar amount of claims grows.

The claims stabilization fund acts as a cushion in the event medical plan income fails to meet expenses. No apportioned funds have been added to this fund since before 1996, said Silberhorn, due to actuarial gains from the stock market. For 2005, the Pension and Health Benefits Committee is seeking an additional

$2 million for this fund balance.

If that fund runs out, we stop paying medical claims, said Silberhorn. Its that simple.

Other reserve funds also need restocking, she said, to the tune of $900,000. This includes $300,000 each for the terminal reserve fund, which is money needed in the event the conference changes health insurance carriers; pre-1982 pension expenses; and future retiree medical expenses. The latter fund has more than $11 million in it now, Silberhorn said, but the actual liability for future retiree medical expenses is $42 million.

In addition to addressing the health care crisis facing the conference, the Council on Finance and Administration will also be looking for ways to advocate on behalf of those people who are either underinsured or have no health insurance.