LOUISVILLE – While some may desire to “point the finger of blame,” the need by the Board of Pensions to revamp the medical dues structure of the Presbyterian Church (U.S.A.) is driven primarily by rising health care costs.
That’s part of the message that Pat Haines, the board’s senior vice president of benefits, brought April 11 to the Presbyterian Mission Agency Board, meeting in Louisville. The medical dues structure has been a sizzling subject since last fall, when the Board of Pensions proposed a revision of the dues structure that provoked a swarm of concern and criticism, and which has since been reconsidered.
Among the concerns making people anxious: the impact of rising costs both on small churches already struggling to afford pastoral leadership and on ministers earning low salaries who may have to begin bearing part of the cost of providing health insurance for their partners and children.
The board in March presented three alternatives, hoping to solicit more feedback. Board officials will discuss those possibilities with mid council representatives at two regional benefits consultations later in April. The board’s health care committee will meet in May, and the full board is expected to choose a course of action at its meeting June 27-29, with changes in the dues structure to take effect most likely in January 2014.
Robert Maggs Jr., the board’s executive director, said the board’s pension plan assets can’t be used to shore up the medical plan, as the pension assets are in a separate trust and can only be used for the benefit of the pension plan members.
In her presentation, Haines laid out some of the fiscal realities driving the move for changing the dues structure. Among the points she made:
If nothing is done, the expenses of the medical plan would exceed revenue by $26.6 million by 2015, drawing reserves of the self-funded plan down to a dangerously and unacceptably low level.
There are relatively few plan members at the top end of the salary range – only 2.7 percent of teaching elders have effective annual salaries of more than $113,000. While some have suggested that the impending deficit be made up by assessing higher fees on those earning the most, Haines said there aren’t enough people earning those high salaries to produce the funds needed. When considered either by age or income or any other criteria, “there’s no one cohort to whom we might point that blame finger as the source of our cost problem.”
The board considered other alternatives, such as increasing co-pays for going to the doctor or buying prescription medicine or by raising the deductibles – in other words, making changes in the architecture of the medical plan itself. Even making significant changes wouldn’t raise enough – a collection of those changes would produce only $13.7 million in additional revenue, Haines said.
Part of the feedback the board has received, Haines said, is that “we’re not one of those large secular employers. Our issues are different, and so too must be the solutions.”
She also discussed the impact that the Affordable Care Act will have on the board’s medical plan. While people have differing views of its strengths and weaknesses, the legislation’s “real goal was to reduce the number of uninsured Americans,” Haines said.
The reforms will bring about $2 million in additional costs to the Board of Pensions, with most of that cost associated with extending health insurance to the young adult children of plan members, she said. The reforms also produced about $4 million in government subsidies for the board, such as improved prescription drug coverage for members who are eligible for Medicare, and with some small congregations taking advantage of a tax credit for small employers.
The board also will pay about $2.5 million in fees to a pool of funds that will be used to help provide care for the 37 million Americans who lack insurance coverage, she said.
The bottom line: “With or without reform, we have a cost challenge,” Haines said.
To help reduce health care costs, the board is designing a program to encourage members to take responsibility for their own health – by introducing a program of rewards and consequences (Haines called them “carrots and sticks”) for actions that could affect a member’s health – such as getting an annual physical and being aware of indicators such as cholesterol levels which could affect one’s health.
There also has been discussion of whether the PC(USA) could or should pool its health care coverage with that of other denominations. The PC(USA) does work through the Church Benefits Association to collectively negotiate on behalf of a group of denominations better prices on such things as prescription drugs.
The idea of offering a medical plan jointly with another denomination has been explored, but there are difficulties, Maggs said – including concerns about the financial health of some other denominations’ plans.
“It’s on the table,” Maggs said. “It’s not ready to eat yet.”