Writers Guild Health Plan a Headache for Negotiators as Possible Strike Looms

As the Writers Guild prepares to send out strike authorization ballots to its members, and with talks possibly resuming even sooner, one of the guild’s crucial issues is shoring up its troubled health plan, which has run multimillion dollar deficits in recent years — $7.7 million in 2013, $6.2 million in 2014 and a jaw-dropping $24.9 million in 2015.

That last is the most recent year publicly available, but the problem has apparently not fixed itself: Sources tell The Hollywood Reporter that the projected deficit over the next three years is $56 million.

The sources, who spoke on condition of anonymity, added that studio negotiators proposed to fund 80 percent of that deficit, some $45 million, with wage diversions — money set aside from what would otherwise be basic wage increases. In return, the studios asked the WGA to at least begin to address the rest of the deficit, about $11 million, and protect against future problems, by modifying the plan.

That would entail instituting and increasing premiums — single individuals pay zero at present, while families pay $600 per year — and/or cutting benefits and/or increasing the earnings threshold at which writers are eligible for health insurance, currently $38,302 per year.

According to the sources, the WGA refused premiums and cuts, and instead asked for infusions amounting to $67.5 million, plus as much as two 0.5 percent wage diversions in years two and three of the contract, amounting to up to $22.5 million, for a total of up to $90 million. Each 0.5 percent wage diversion is worth about $7.5 million per year at predicted WGA aggregate earnings, according to a source.

The WGA didn’t respond to requests for comment, and the AMPTP declined to comment.

Those figures puts the parties at a significant distance from each other. But the gap is not unbridgeable, if the $56 million estimate is on point.

For instance, if the WGA agreed to increase premiums by just $500 per year for each of the approximately 6,600 active participants in the plan and by $300 for each of the 2,300 retirees receiving benefits, that change alone would generate about $12 million over three years, enough to completely close the gap between the studios’ offer and the studios’ $56 million cost estimate.

That assumes, of course, that the studio estimate doesn’t understate the problem. In asking for $90 million, it’s not clear whether the WGA has a higher estimate, or hopes to fund a rainy-day reserve for the plan, or simply is high-balling the number in a bid to lift the studios’ proposal.

An alternative to premiums would be cutting benefits, tightening eligibility or some combination of all three. Is it reasonable for the studios and their collective body, the Alliance of Motion Picture and Television Producers, to ask for these concessions?

That’s a matter of opinion. THR analyzed the guild health plans and found that the WGA plan on paper appears comparable to the DGA plans, but the sources said that the WGA plan in practice is more generous, adding that the DGA plan’s administrators enforce its plan restrictions and conditions much more rigorously than the WGA plan’s administrators do. The WGA’s plan also appears similar to the SAG-AFTRA Plan I, but the latter charges premiums that range from $1,200 for an individual to $1,500 for a family.

Given the size of the problem, it seems likely that the WGA plan will have to institute premiums and make cuts to benefits and eligibility. To put this in context, a $500 premium increase results in premiums of $500 for an individual and $1,100 for a family, which are still less than SAG-AFTRA’s and scarcely unmanageable for most middle-class people.

And, to buy a somewhat less generous plan on Covered California, the state’s Obamacare exchange, would cost a whopping $6,000 per year for a single person (Blue Shield Gold 80 PPO, 45-year old Los Angeles resident making $75,000 per year). That would be sticker shock.

Thus the guild plans, and even a modified WGA plan, are still much better than what’s available to individuals in the external world, a clear union benefit. But, while premiums and cuts may be what the fiscal doctors order, those will still be bitter pills for the union membership — and it’s not clear that there’s a spoonful of honey around to make the medicine more palatable.

3/31/2017 5:00 pm PT Corrected that $45 million offer is with wage diversions, not without, and added additional detail.