DGA Reiterates Health Plan to be Bargaining Focus

Gil Cates: Guild 'must act in all urgency to secure our Health Plan'

In the face of rapidly rising health costs and other factors hammering at the DGA’s health plan, the guild’s negotiations chair told members that “it is now critical that the burden of increasing costs shifts to the employers.”

The warning came in a message from Gil Cates to members to be released Thursday afternoon. The missive, which reinforces previous statements by Cates, signals that health care will be a key priority for the DGA when negotiations with the AMPTP commence on November 15.

The full letter is below.

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Dear Member,

By the time you receive this issue of the DGA Monthly, we’ll be just weeks away from the scheduled start of our negotiations on the Basic Agreement and the Freelance Live and Tape Television Agreement with the AMPTP.  We’ve been working steadily to make sure we’re as prepared as possible before we sit down at that negotiating table.

As part of that process, the Negotiations Committee held its second full committee meeting in Los Angeles on October 2.  At the meeting, the full committee heard specific proposals that had been developed by each of the subcommittees since the last meeting.  The subcommittees will continue to meet and work on their proposals so that the full committee can make a final determination about negotiating priorities at our next full meeting.  While we’ll be considering other proposals on a number of very important issues, I want to focus this update on healthcare.

The state of the DGA Health Plan is once again a topic of much interest, as it has been at any number of member meetings in recent months.  Members have appreciated learning why the Health Plan is in need of intervention.  For those who would like to know more, here’s a brief synopsis:

In 2004, the DGA’s Health Plan faced an uncertain future.  Projected annual double-digit cost increases were expected to leave the Plan without funds to pay benefits by 2008.  I was Chair of the Negotiations Committee during that negotiations cycle, and I can tell you, we knew we had to act quickly to make stabilizing the DGA’s Health Plan a priority in that year’s negotiations with the AMPTP.  When an agreement was reached, the DGA had achieved its goal - an infusion of more than $50 million from the employers to secure the Health Plan.  Our efforts to shore up the Health Plan worked exactly as we thought they would.  We resolved the crisis and protected the health benefits of our members, retirees and their families.  

However, the extreme rise in healthcare costs since then, together with uncertainty about how national healthcare reform will affect plans like ours, have led us to believe that we must act again in all urgency to secure our Health Plan.

Why is the Health Plan in danger?  Since 2005, healthcare costs have continued to rise while contributions to the Plan have remained flat.  Our consultants estimate future healthcare inflation of as much as 10% a year.  National healthcare reform is expected to have costly ramifications for private plans like the DGA Health Plan, and nobody knows yet exactly how severe those will be.  

Additionally, Plan investment returns were lower than projected because the federal government has kept interest rates at rock-bottom levels in an effort to manage the economic downturn.  Furthermore, demographic changes mean that fewer active participants are contributing to a plan that now must cover many more retirees.  

At the same time, contributions from the employers have remained set since 2005 at 8.5% of compensation with certain caps that have also remained set, and since average salaries have been steady for the past several years, overall employer contributions to the Plan have remained virtually unchanged during this time period.  

This has left the Plan solely responsible for managing the increased expenses from rising healthcare costs, healthcare reform and demographic changes without an accompanying increase in contributions from the employers to balance the higher costs.  

Like many other guilds and unions, we have made adjustments to benefits and raised minimum earnings thresholds as part of our prudent stewardship of the Plan.  Other changes included increasing annual deductibles for individuals and families; increasing the dependent premium for active participants; limiting the number of times certain benefits can be used; switching prescription drug benefit managers and mandating that long-term (three months or more) prescriptions be filled through a mail-order pharmacy whenever possible; and increasing co-pays for brand-name drugs when generic drugs are available.  Despite these adjustments and others, it is now clear that without intervention, future costs will have to be reduced by either cutting back on benefits or increasing co-pays and deductibles.

It is now critical that the burden of increasing costs shifts to the employers.  With costs continuing to rise and tremendous uncertainty about how national healthcare reform will impact the Plan, both in the short-term and in the future, sustaining healthcare benefits is an issue that will need the cooperation of all parties - including the employers.  

Protecting the health benefits of DGA members, retirees and their families remains one of the most important things we do as a Guild. We look forward to addressing this issue during negotiations and working with the employers to achieve a more equitable, sustainable way of providing health benefits for our members.

While we’ve been preparing for negotiations, SAG and AFTRA have been in the midst of their negotiations with the AMPTP.  They began negotiations as expected on September 27 and as of this writing, both sides have continued to negotiate under a media blackout.  We hope the negotiations are going well and we look forward to hearing more about their progress in the near future.  

On another note, I’m extremely pleased to report that the Guild successfully completed negotiations on a new Network News, Sports and Operations in New York in the early morning hours of Saturday, September 25.  DGA Second Vice President Bill Brady together with DGA Eastern Executive Director Russ Hollander brilliantly led the negotiations, and even though the negotiations were among the toughest we’ve faced in a long time, they did a remarkable job.

Thanks,

Gil Cates

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