Sunday, June 24, 2012

More on the Denominational Health Plan

Yes, I know there's an alternate budget proposal on the table!  I'm working that issue and will publish a post as soon as I finish my analysis.  In the meantime, here's this!

Over at Seven Whole Days, Scott Gunn has proposed a principle on political resolutions at General Convention:

Let us tell the world what we are going to do about political problems, rather than telling the world what they should do about political problems.

Well, General Convention has certainly told the US government what IT should do about the problem of health care coverage in the United States.  In 2009 alone:

2009-C071 called on all parts of the church to advocate for universal basic health care for all;

2009-D048 called for universal health care coverage and a single-payer heath care plan;

2009-D088 called for national universal health care reform.

Now it’s time for us to put our money where our mouth is.  That’s what the US government should do; well, what should we do?  It’s easy enough to demand that someone else do something about people who lack health insurance; can we stand behind our convictions when it is going to cost us money?

That’s what we decided to do in 2009.  Resolution A177 established the Denominational Health Plan, to be administered by the Medical Trust of the Church Pension Group.  The DHP has two basic goals: 

  • Containing healthcare costs for the church in light of rapidly increasing healthcare costs nationwide; and
  • Equal access to healthcare coverage for clergy and lay employees.

Worthy goals – but the DHP has run into some controversy.  Mostly because we have suddenly discovered that covering additional people will cost additional money!  Surprise, surprise!  Justice requires some sacrifices!

Let’s make a couple of points absolutely clear:

  • It is absolutely essential for the economics of the plan that everyone be required to participate, because of the concept of “adverse selection,” which I explained in detail here.  Basically, this means that without a mandate, healthier and cheaper employees and groups will be motivated to buy their insurance elsewhere, leaving CPG to cover only older, sicker employees, raising the cost of CPG insurance for everyone. 
  • The mandate has not gone into effect yet!  It does not become effective until January 2013!  That means that we have no basis yet on which to judge the effectiveness of the Denominational Health Plan. Don’t judge the DHP as ineffective when we haven’t even seen it at work yet!
  • Some folks have complained that since adopting CPG insurance, their health insurance premiums have continued to increase, and cited this as evidence that the DHP isn’t doing its job.  Folks – health costs across the country have continued to increase, by about 9% a year.  A CPG representative tells me that CPG insurance has increased by an average of about 5% a year.  This lower percentage increase is direct savings to us ($37 million so far, according to CPG), attributable to the fact that numerous dioceses have already joined the plan.  Don’t blame CPG that health costs in the U.S.  continue to rise!
  • The fact is that the Denominational Health Plan directly pits the interests of clergy employees against those of lay employees.  I believe that clergy need to be very, very careful about voting their own interests in opposition to lay interests.  Lay people are vastly underrepresented in the councils of our church, because there are far more lay people than clergy people, but we have the same number of deputies to General Convention.  If anything, clergy need to bend over backwards to protect the interests of lay people, without whom we wouldn’t have much of a church.  We clergy should not be using our disproportionate power to trample on lay interests.  

Now, on to some more specifics.  The controversies over the DHP fall into three categories:

     1.  Requiring clergy and lay benefits to be equal means either you have to reduce clergy benefits, or you have to offer lay people the same Cadillac benefits the clergy have been getting all these years.  And make no mistake, many clergy people receive true Cadillac plans.  Where most secular employers these days offer high-deductible, low-cost plans, and require employees to pay part of the premiums, clergy have gotten used to expecting low-deductible, benefit-rich plans, fully paid by the church, including full family coverage.  Such a plan in my diocese (Arizona) could easily cost $25,000 a year. 

This is a way, way better plan than the average American worker can expect to receive.  According to a study by the Kaiser Family Foundation, the average American receives a plan worth $15,073 per year, and personally pays 27.3% of the premiums, or $4,129.  (Click Here for the report; click on “Report” and see Figure 16 on page 25.)

So, in a limited-resource world, do we bring the clergy down from a Cadillac to a Chevy in order to provide a Chevy to lay employees too?  I argued here that dioceses actually have the power to create transition rules to phase the new rules in over time, not taking away anyone’s Cadillac, but providing Chevys to all new employees.  I think this is a reasonable result.

Honestly, I think the gospel call to provide health insurance to our full-time lay employees who don’t have other coverage (such as spousal coverage, etc.) really couldn’t be clearer.  I am stunned that anyone who follows the gospel would think otherwise.  See Scott Gunn's post here for a few cogent arguments about this.

     2.  Some people believe that CPG insurance costs more than insurance under other plans.  This may well be true because of the nature of The Episcopal Church’s covered group – mostly clergy, who are older (and therefore less healthy and more expensive) than the average American.  Requiring all employees to be covered may well bring down the average cost for everyone, because as it is, the expensive older employees are the only ones who have an incentive to join the CPG plan.  That's adverse selection for you!  If you don't know what I'm talking about, click here for info.  

Again, the DHP is not fully implemented yet; until it becomes mandatory on Jan. 2013, we will have no way of judging how powerful the effect of the mandate will be.  It is not fair to judge the DHP as inadequate when it hasn’t even gone into effect yet. 

     3.  Differences in price among various groups in the church (for instance, geographic groups).  According to a CPG representative, before the DHP was implemented, CPG health insurance had 14 different pricing “bands,” or price structures, based on factors like geography, demographic characteristics of the group, etc.  They have already reduced this to 10 bands, and will go to 7 bands when the mandate is implemented next year.  This means that pricing differences are being narrowed already, at CPG’s initiative.  

Please note that it IS possible for CPG to institute one standard price that applies churchwide.  However, this would mean that lower-cost groups would be subsidizing higher-cost groups.  It would mean that dioceses in lower-cost areas like Phoenix and Seattle would be paying extra to account for the higher cost of medical care in New York City and Miami.  We as a church should decide whether we are willing to do this. 

The economic risk of letting low-cost groups subsidize high-cost groups is that CPG insurance would be noticeably more expensive than private insurance in low-cost areas, providing an incentive for those cheaper dioceses to drop out of the plan, raising the average cost of insurance for everyone left behind.  Adverse selection at work, again!  Participation in the plan must be mandatory for it to work. 

So – back to the beginning. Should we spend another convention telling the US government what it should do about health care reform? Or should we act on our own to do justice for our lay employees?

As Scott Gunn says, let’s stop telling the world what they should do, and start telling the world what WE are going to do.  Let’s make sure our lay employees are covered.  It’s responsible, it’s fair, and it’s our gospel call to love our neighbors as we love ourselves.

1 comment:

  1. I agree! It’s responsible, it’s fair, and it’s our gospel call to love our neighbors as we love ourselves. Thanks for making this issue clear.

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