GMFC Healthcare Benefits

Massachusetts Example

Future:

What does PPACA mean for GMFC?

PAST:

Union Effect on Benefits

Workforce

Restructuring

Background: employee penalties, individual mandate, state led exchanges, subsidies for low income

Pros:

• state run exchanges benefited low income workers
• state run exchanges were less expensive for employers
• Unions took insurance benefits out of negotiations

Cons:

• less quality plans or "Swiss cheese" (p. 40).
• temptation for employers to "side step the mandate"

Overall:

• Union leaders said "little changed" (p. 42).
• low wage workers received better insurance options
• high wage workers continued to struggle with high costs and lowering quality of plans

(Cadambi Daniel & Noyes, 2013)

It is tempting to lower our full time workers by: layoffs, subcontracting, using temporary workers or independent contractors.

Pros:

• lower wages and reduced health benefit costs.

Cons:

• "adversely impacts employee morale"
• higher turnover
• Less qualified employees
• exposes employer to liability under Section 510 of the Employee Retirement Income Security Act
• not ideal for employers like ours who rely on full time workers

(Gibson & Tucker Fife, 2014, p. 8)

Is the ACA:

• a "victory for organized labor" (Cadami Daniel & Noyes, 2013, p. 37).
• a "death warrant"(Gibson & Tucker Fife, 2014, p. 3).

How will it affect union members?

• the future is uncertain
• modeled after Massachusetts 2006 healthcare reform
• known that employers have been "steadily shifting plan costs onto employees" (Cadami Daniel & Noyes, 2013, p. 39).

Historically, union bargaining power resulted in:

• a "compensation package above the market clearing" (p. 669).
• rearranging the mixture of total compensation
• higher level of benefits at the expense of wage and salary compensation
• overall- greater benefits than nonunion situations

(Budd, 2005)

HR Involvement

HRM must be involved in the "continuous probing and reevaluation of the mix of compensation mechanisms and the manner in which they are administered"

(Hannah, 1995, p. 23).

GMFC's Options

Workforce Restructuring

Pay the penalties

Play the new game

Recommendation

Pay the Penalties

Present:

Challenge or opportunity?

Pros:

• reduced cost for employer
• redirect cost savings to other benefits

Cons:

• Poor public image
• Poor recruitment efforts
• Poor workforce morale

1. Complete benchmarking

2. Analyze impact of PPACA on GMFC

• Will Cadillac tax affect GMFC?
• Can employees be eligible for federal tax subsidies if they use the exchange?

3. Review voluntary benefits

4. Model alternatives for employee choice

5. Plan for union negotiations and proof that employee choice is mutually beneficial

(Dinkin 2015).

Background:

• Last three year healthcare cost per employee has risen 9%, 13% & 11% respectively
• Upcoming PPACA regulations

Goal:

• Contain or reduce healthcare costs
• Have a plan for upcoming negotiations

Play the new game

PPACA "creates a unique opportunity for employers to take a fresh strategically based total compensation approach" (p. 43).

• employee scenarios
• choice of compensation package in terms of wages, PTO, medical insurance options, contibutions to HSA, retirement options
• allows employers to establish a total price tag to stay in budget and compare to benchmarking in the marketplace

(Dinkin, 2015)

References

Budd, J. (2005). The effect on unions on employee benefits: Updated employer expenditure results. Journal of Labor Research, 26(4), 669-676.

Cadambi Daniel, M., & Noyes, E. (2013). Obamacare and collective bargaining: The Massachusetts experience. New Labor Forum, 22(1), 37-43.

Dinkin, E. (2015). Dust off the historical approach to total compensation. Benefits Quarterly, 31(1), 43-50.

Gibson, S., &Tucker Fife, J. (2014). What the ACA means for negotiating employee welfare benefits. Employee Relations Law Journal, 40(1), 3-11.

Hannah, R. (1995). The equity niche in total compensation: A brief review of recent research and some practical application. Benefits Quarterly, 11(1), 18-24.

GMFC Healthcare Benefit Negotiations

Thank you for your attention