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| By MICHAEL R. McKAY | |
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In a letter to the American Maritime Officers deep sea, Great Lakes and inland waters membership Aug. 8, I announced that the trustees of the AMO Medical Plan had approved "deep but unavoidable reductions" in benefits payable to union members and their families under the Plan, beginning Jan. 1, 2004. I explained that the trustees' difficult decision had been made only after "months of discussion and debate" and "due consideration of all possible and practical alternatives." I said the trustees' action had been influenced in part by out-of-control health care and health coverage costs, "a persistent nationwide crisis that affects every health insurance carrier and every multi-employer, group and individual health plan in every industry." I pointed out that many plans in the private and public sectors had increased premiums, reduced coverage or coverage eligibility, raised deductibles and co-payments, or adopted combinations of these measures, and that some employers had either stopped paying shares of health insurance premiums or simply terminated their plans. Five days later, the AMO Medical Plan detailed the benefit cuts in its own mailing to the AMO membership and warned that, without the reductions, the plan would face insolvency "within the next five years." On Sept. 10, news media outlets nationwide reported the findings of a study conducted by the Kaiser Family Foundation and the Health Research and Educational Trust. According to the study (conducted between January and May), health insurance costs were rising at a rate of 13.9 percent in 2003, the sharpest spike since 1990. This will be the third consecutive year of double-digit medical care cost increases--12.9 percent in 2002 and 10.9 percent in 2001 (these figures do not reflect the rising costs of prescription drugs). In group plans, costs this year were outpacing the nationwide average at 15.6 percent. The study's conclusions "suggest that, despite recent signs of slowing inflation in health care costs, companies and their employees are still being hit hard," said an article in The Wall Street Journal. The study, which examined the health insurance plans of 1,800 employers nationwide, said 80 percent of the companies are likely to pass more of the cost on to workers next year as higher premiums. The AMO Medical Plan remains among the very few that do not impose premiums on plan participants or their dependents. According to the study, the average premium for family coverage in 2002 was a whopping $9,068 a year, with employees paying an average $2,412 share. The employee share for family coverage rose 49 percent since 2000. The average premium for individual coverage, which applies to single employees with no dependents, last year was $3,383, with the employees' average cost at $508. The employee share for individual coverage has increased 52 percent in the last three years. On average, employees pay 27 percent of family health insurance costs and 16 percent of the cost of individual coverage. The study said 57 percent of the employers surveyed expect to increase co-payments on prescription drugs next year, and 44 percent expect to raise medical, hospitalization and diagnostic deductibles. A few employers said they will require employees to assume greater premium shares and/or restrict eligibility for benefits. The average deductible for in-network services provided this year through Preferred Provider Organizations, or PPOs, is $275, a 57-percent increase over the average three years ago. For out-of-network PPO services, the average deductible is $561, up 65 percent from 2001. "The rising cost of health care also weighs on the broader economy," wrote Vanessa Fuhrmans in The Wall Street Journal account. "Health care costs have become one of the largest expenses for many companies, and double-digit increases will make it even more difficult to hire new employees. As companies pass on more of the burden to their work forces, employees are being forced to allocate more of their income to health care." Kaiser Family Foundation President and Chief Executive Drew Altman told the reporter: "The cost increases are being felt across the economy." In AMO, the intent as I stated it Aug. 8 "is to right the AMO Medical Plan, to preserve it at the highest possible level" for AMO members and their families. But this issue is of obvious and direct concern to all licensed and unlicensed seagoing unions. Under call from the Seafarers International Union Plans, the unions' benefit fund administrators have met twice and will meet again to consider ways in which the unions can combine their clout and their resources to get better deals on specific, particularly expensive coverage. AMO Plans Executive Director Steve Nickerson participates in these sessions, and he and his staff are researching other ways to minimize the impact of the benefit reductions approved by the AMO Medical Plan trustees. This issue is also of obvious and direct concern to the AFL-CIO, which has already helped make it a principal topic in the campaigns leading up to next year's Presidential and Congressional elections. |
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