Important Healthcare Update
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Dear Members,
While our bargaining team is working hard to prepare a strong case for the fact finding hearing (see below for specifics), this week management also forced our Board to make a last-minute decision about healthcare. On Tuesday and Wednesday, HR met separately with our union, the faculty union, the maintenance union, and the police union to present long-overdue details about additional health insurance options and gave us three days to decide if these options should be offered to our members without bargaining.
Before sharing the specifics, we want to make sure to allay any concerns by saying: our health insurance is not changing, nor is the percentage of the premium that we pay. We know that a lot of us work at UVM because of the quality of the health insurance, and that is not at immediate risk.
Here’s the situation: HR officials called a meeting with our union this Tuesday morning, and with the other UVM unions on Wednesday. Co-Presidents Claire Whitehouse and Ellen Kaye, Co-Lead Stewards Jack Roberts and Kara Williams, and AFT Field Rep Max Tracy attended. At this meeting, HR informed us that they planned to offer 3 additional healthcare coverage options to non-represented staff during Open Enrollment (November 6 - 27). They handed us a Memorandum of Agreement (MOA) and told us that if we wanted these options made available to our bargaining unit we had to sign it by Friday–three days later. This MOA would force us to waive our right to negotiate the costs or details of coverage for these new options for the next year.
This short timeline put us in the position of having to decide what to do as a Board because three days is not enough time to explain the proposed changes and survey members as we do during bargaining. Our Board unanimously agreed that we could not make the precedent-setting choice to sign away our right to bargain new health care options, especially without the consent of our members. When we asked why they were introducing this at the 11th hour, Chris Lehman replied that the blame was on him.
Our choice was made clearer by the fact that these new options significantly increase healthcare costs for employees while carrying little to no reduction in premiums for the majority of our members. Below is a breakdown of the details and the numbers. Because HR’s offer would result in us paying more or about the same for worse health insurance, the Board was in full consensus that we should not sign the MOA.
The profit-based model for healthcare is failing, especially here in Vermont where healthcare costs are high. As premiums rise, so too do the costs for employers and employees. UVM has made its approach to managing this burden clear: the University would like to reduce its healthcare costs by shifting the risk onto its employees, despite the low wages it pays to so many of us. At the bargaining table, we have mutually agreed with management to keep the healthcare article the same for our second contract, and so the danger to our healthcare is not immediate. However, we expect further efforts to reduce the burden of healthcare on the University by increasing the burden for staff. What we saw this week will be the first of many attempts to eventually replace our high quality health insurance with plans that shift the burden and risk onto us.
Please read below for a deeper explanation of the options and premiums, which shift risk onto employees without offering meaningful premium savings. It’s crucial that we all talk to our colleagues to make sure they understand why we cannot sign away our right to negotiate over healthcare, and why we certainly cannot make such a critical decision without our members’ consent.
In Solidarity,
The Executive Committee, on behalf of the UVMSU Board
Healthcare terminology:
Premium: Monthly amount paid for coverage. This is split between the employer and employee.
Deductible: Amount you pay out-of-pocket before the plan starts covering cost. Our current plan has no deductible for care and a small deductible for prescription drugs.
Co-pay: Fixed amount paid for care or prescriptions.
Co-insurance: Percentage paid for care or prescriptions.
Co-pay vs. Co-insurance example: Urgent Care visit costing $330. In this example, there is no deductible or the deductible is already fully paid.
Co-pay: Patient pays a $20 co-pay, insurance pays the rest.
Co-insurance: Patient pays 20% of the total cost, which is $66. Insurance pays the rest.
Out-of-pocket maximum: Maximum amount you pay in a year. After that, the plan covers all costs.
Flexible Spending Account (FSA): Employees can open an FSA and make pre-tax contributions to pay for medical, dental, or vision costs not covered by insurance. FSAs do not roll over fully year to year and employees cannot take these funds with them when they leave their employer. This is what we currently have.
Health Savings Account (HSA): Only available for High Deductible Health Plans. Employees can open an HSA and make pre-tax contributions to pay for medical, dental, or vision costs not covered by insurance. Employers may also contribute to the HSA to offset some of the deductible costs. HSAs do roll over fully year to year and employees can take these funds with them when they leave their employer.
General healthcare explainer:
All insurance is a gamble: Insurance companies bet on how much service its clients will need and what it will cost. Insurance companies set their premiums at an amount where they think their total premium income will exceed total healthcare costs so that they can make a profit.
UVM is self-insured. They don't set the premium rates, but they collect all of our premiums and take on much of the risk for the cost of our healthcare.
Under our current plan, there is very little risk for the insured employee (no deductible, relatively low out of pocket max, affordable co-pays). This means that Blue Cross Blue Shield and UVM have taken on that risk.
Healthcare in Vermont is increasingly expensive and premiums have skyrocketed. UVM is looking for ways to control its costs. Because UVM can't make healthcare cost less, they are trying to save on costs by asking employees to take on additional risk.
UVM management also doesn't like the cost share grid–a schedule of what percentage of the premium we pay according to our income–because the highest category pays 36% of the premium. They complained at the bargaining table that this inhibits their ability to offer competitive packages to "top talent," aka top earners.
The new options they proposed all have more risk for the employee. This is true in varying degrees for the second Preferred Provider Organization (PPO2) option and both of the High Deductible Healthcare Plans (HDHPs). This means that the employee has to make a calculation about how much healthcare they need and be prepared to pay the consequences if they guess wrong. Under our current plan, almost all of those consequences fall to BCBS and UVM.
They have eliminated the cost-share grid for the HDHPs and compressed it for PPO2. This means that there is almost no incentive for lower-income people to choose these options because there is little to no premium savings relative to the increased risk of these options.
Comparison of premium costs by base salary:
Our current plan has a cost-share grid where people who earn less pay a lower percentage of the premium, and people who earn more pay more. The cost-share grid we have in place is divided by bands of $10,000.
The proposed PPO2 plan compresses this cost-share grid into 4 categories. Both high deductible plans eliminate the cost-share grid, so that all employees pay 20% of the premium regardless of income.
Medical premiums for our current plan (PPO1) will increase 19.3% in 2025. This is no doubt a big cost, and we would welcome ways to decrease the burden of premiums for our members. However, the tables below demonstrate that these new plans do not offer a meaningful reduction in cost, if any, for the majority of our members. While there are meaningful premium reductions for higher earners, the combination of high deductibles and co-insurance mean that healthcare costs will eat into these savings, and these savings could be spent entirely with one visit to the emergency room.
Please see this schedule for full details of premiums compiled by HR.