Death by 1,000 health care cuts

July 31, 2013


In recent weeks, a heated debate has sprung up between University of Minnesota employees and administration over proposed changes to health insurance benefits included on UPlan, the University’s health plan.

If it does not change to comply with the Affordable Care Act, the University will be hit by a $48 million tax over five years. To avoid this tax blow — which is similarly affecting many employer-provided, high-cost health insurance plans at companies and public institutions across the nation — the University is changing UPlan benefits. The changes “would raise the cost of copays for primary and specialty care and make employees pay deductibles, which they haven’t had to pay before,” the Minnesota Daily reported July 24.

The goal behind the ACA health benefits excise tax, nicknamed the “Cadillac tax,” is to disincentivize use of health plans, encouraging enrollees to think twice about ordering potentially unnecessary medical tests. By scaling back benefits and increasing out-of-pocket expenses for employees, this provision of the ACA aims to keep health care premiums down. Though the tax will not come into effect until 2018, the provisions of the law states “a plan that costs more than $10,200 for an individual and $27,500 for a family would typically pay a 40 percent excise tax on the amount exceeding the threshold,” the New York Times reported in May.

However, there is debate among University employees and American Federation of State, County and Municipal Employees union members about the proposed changes to benefits and frustration with the way these changes are being discussed.

Cherrene Horazuk, president of AFSCME Local 3800 representing University clerical workers, and Barbara Bezat, president of AFSCME Local 3937 representing University technical workers, suggested the University is using the ACA’s implementation to justify shifting greater health care costs to employees. The union also questions whether the University’s plan is presently considered a “Cadillac” plan at all.

Horazuk proposed the University look closely at all aspects of the plan to see which levels would be susceptible to taxation under the ACA, lobby for the plan to fall under the “Cadillac” threshold and negotiate with insurance companies to bring down coverage costs.

Both presidents said a key reason people come to the University to work is because they know they will have access to quality health care; they are willing to forego a more substantial salary in exchange for good benefits.

Horazuk said if employees are expected to pay more out-of- pocket expenses for any reason, wages should be raised to offset these costs. Both leaders said they are concerned with the way these changes would make students and visitors perceive the University.

“If you don’t respect working-class workers,” Horazuk said, “how do you respect working-class students?”

Horazuk and Bezat said they were interested in the possibility of a wage-based or sliding-scale health benefits payment program to address increased employee expenses. Horazuk said other universities, like Dartmouth, Amherst and the University of California, have instituted similar sliding-scale methods.

Horazuk and Bezat said there is solidarity between University employees, even from tenured faculty who might not be hit as hard by the proposed changes to UPlan.

Bezat said a survey containing a link to a petition opposing UPlan changes was sent to all employee groups, and within five minutes, she could see the hit rate sharply climbing as employees read and signed the petition. The petition now has 1,208 signatures, according to a representative from AFSCME Local 3800.

Before vital decisions over health care benefits are hastily handed down from the administration, all voices and compromises must be heard. Though the threat of the “Cadillac” tax is a genuine concern for the University, there is time before 2018 to hold discussions and collect data before scaling back benefits.

Bezat and Horazuk said they will not give up on benefits negotiations, despite growing frustration.

“We will continue fighting because we know people who have gone without insurance,” Horazuk said, “and it is deadly.”