SAG Health Plan on Steep Downward Trend, While AFTRA Plan's Changes Are Modest (Graphical Analysis)
Part 1 of 3: The SAG health plan isn’t so much better than AFTRA’s any more –- if at all –- and SAG’s is declining more quickly than AFTRA’s.
With results of the SAG/AFTRA merger vote just hours away, an extensive analysis by The Hollywood Reporterunderscores that the future of the SAG health plan may hang in the balance: unmerged, that plan is becoming less robust and more expensive – and this is happening much faster to SAG’s plan than AFTRA’s.
The analysis also illustrates how the fate of the health plan is tied to that of the pension plan, and suggests several reasons why the health plan has had to make a stunning number of cuts over the last several years – far more than the AFTRA plan has.
There may be more bad news to come: buried in an annual federal filing is a sentence speaking of the need for “future increases in the collectively bargained contribution rates and changes to benefit and eligibility levels.” And more prominently, in their fall 2011 newsletter, the SAG plan’s trustees warned that “if the unfavorable trends do not improve, additional benefit modifications may have to be made” in both the pension and health plans.
The trends the trustees have cited over the last several years are the 2008 financial crisis, spiraling healthcare costs, the impact of federal healthcare legislation and the shift in television work to AFTRA. They’ve referenced that last factor repeatedly since 2009.
Employer contributions – the money that studios, producers, ad agencies and others pay the plans – are calculated as a percentage of (and are above and beyond) member earnings. That’s why the shift in television work to AFTRA has hurt SAG’s pension and health plans and helped AFTRA’s.
Employers are unlikely to part with more cash without something in return. Indeed, hard bargaining is apparently in process with regard to the IATSE/Teamsters pension and health plan, which is struggling with a substantial forecasted deficit. Contract negotiations recently recessed so the parties could study additional P&H data.
And, although the health plan is under financial pressure, that doesn’t mean that the plan is in danger of failing. As recently as last Thursday, a statement by the trustees said “the pension and health plans are safe . . . the fiscal integrity of the Plans remains absolutely sound and participant benefits are secure.” The trustees added that “There has been no change in the status of Plan assets.”
What it does mean, however, is that the trustees have had to make negative adjustments to the plans, and may need to do so in the future, as the fall 2011 newsletter says.
This three-part series focuses on health plan trends. However, as will become evident, these matters are intertwined with the fiscal condition of the pension plans.
SAG Plan II is Often – But Not Always – Easier to Qualify for than AFTRA’s, or Less Expensive
Compared to AFTRA’s plan, SAG’s Plan II is often easier to qualify for and/or has lower premiums, but this isn’t always the case. For couples or families (i.e., two or more dependents total), at earnings levels between $15,100 and $30,000, the AFTRA plan is shockingly more expensive than SAG Plan II. On the other hand, SAG Plan I isn’t even available at earnings levels below $30,750, and that threshold is increasing by 3 percent a year, or about $1,000.
This chart summarizes the comparison:
(The details for this chart and the next two are listed in an appendix in Part 3 of this series.)
Contrary to Popular Belief, the AFTRA Plan is Better than the SAG Plans in a Number of Ways
The general idea has been that the SAG plans are better than AFTRA’s, but this is actually not true – or no longer true – in a number of areas.
Measured by copays, coverage percentages, deductibles and out of pocket maximums, the AFTRA plan is actually better than both SAG plans in most areas: in-network hospital coverage, non-network hospital (the SAG plans no longer cover this at all), emergency room, in-network major medical, prescription drugs at retail, prescription drugs by mail, life insurance, and accidental death and disability insurance.
In addition, the AFTRA plan is better in mental health and chemical dependency than SAG Plan II, which no longer covers this area at all.
In contrast, the only areas in which the SAG plans are superior are non-network major medical and dental. In addition, SAG Plan I covers vision, but Plan II and the AFTRA plan do not
The SAG plans use Blue Cross / Blue Shield, while AFTRA’s uses CIGNA.
Here’s the comparison:
Depending on earnings level, family size and utilization of the various services, the coverage differences can make up for some of the premium differences.
The SAG Health Plan’s Advantages Have Eroded in the Last Several Years
Why is there a misconception that the SAG plans are uniformly better than AFTRA’s? The answer is that while this may have been true – or at least closer to the truth – several years ago, the SAG plans have deteriorated in the last few years and perceptions may not have caught up.
Based on a review of newsletters issued by both unions’ plans, THRfound that the SAG health plan has cut benefits, raised premiums, eliminated coverage and tightened eligibility at a net rate much faster than AFTRA’s:
The Number of Active Participants Declines
In addition, the number of working members covered by the SAG health plan dropped by at least 12 percent, or 2,300 members, from 2008 to 2010, the most recent figures available, while, in contrast, the number covered by the AFTRA plan increased about 4 percent:
The SAG Eligibility Threshold Increases
Adding to the difficulty, the SAG health plan earnings threshold itself has been creeping up by two to three percent per year (with a three percent target by the trustees for future years), whereas AFTRA’s threshold has remained unchanged:
The combined effect of split earnings and a rising threshold has been to steadily reduce SAG member’s access to their union’s healthcare plans.
SAG Premiums Shoot Up
And at the same time, the premiums for SAG’s healthcare plans have shot up as much as 66 percent in a single year, while the AFTRA plans’ have increased over the last four years at a modest four to five percent:
As a result of the increases, the total premiums collected by the SAG plan increased about 45 percent in a single year, even as the number of people paying premiums declined, while the AFTRA plan collected almost 15 percent more premiums, but the amount was spread over a slightly larger number of people than the year before:
The aggregate SAG premiums, in other words, shot up from 2009 to 2010 by $10 million.
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