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Opting out of the Denominational Health Plan?

Opting out of the Denominational Health Plan?

At its 195th convention last November, the Diocese of Ohio approved language that both adjusted to the reality of living with the Denominational Health Plan and, in another resolution, R-8, asked the General Convention to remove the requirements from A177 that require diocesan participation.

“Resolved, the House of ________________ concurring, That the 77th General Convention removes the mandate that dioceses must participate in the Denomination Health Plan by purchasing health insurance through the Medical Trust/Church Pension Group. All other requirements of A177 passed by the 76th General Convention remain in force.”

Proposers:

The Rev. Joe Ashby, Grace, Mansfield

Ms. Denise Caywood, St. Philip’s, Akron

The Rev. Dr. C. Eric Funston, St. Paul’s, Medina

Mr. Stephen Gracey, St. Luke’s, Cleveland

The Rev. Alan C. James, Bishop’s Staff

Mr. Bill Joseph, New Life, Uniontown

Ms. Susannah Perkinson, Our Saviour, Akron

The Rev. T. Conrad Selnick, St. Christopher’s-by-the River, Gates Mills

The Rev. Dr. Brian Wilbert, Christ Church, Oberlin

Rationale:

The Denominational Health Plan (DHP) as it was enacted and is in the process of being implemented, does not create a common premium across all dioceses, but has individual premiums for each diocese based upon the particular diocese’s demographics, past experience, and local medical costs. In addition, it is expected that each diocese will be self-funding for its insurance costs. Other than a very minimal decrease in administrative costs, there is no financial benefit for dioceses to participate in the DHP because individual dioceses are neither participating in a larger pool of insured individuals from across the Church nor is the cost of insurance distributed across diocesan lines.

The mandate for all dioceses to participate in the DHP through the Medical Trust prevents dioceses from negotiating for equivalent insurance coverage at a lower cost. Congregations and Dioceses cannot afford to relinquish the financial right and responsibility to secure the best insurance at the least expensive cost.

Looking at A177 (at least with an untrained eye), it seems that if the requirement to participate were to be removed, there wouldn’t be much of it left other than good intentions. That, together with the common recognition that it was not universally well received, has us wondering:

1. Is this something we can expect to see more of, or is it something that’s already happened without our having heard, or is Ohio the lone case?

2. To what extent (and considering which factors?) would a diocese stand to realize a cost savings by negotiating on its own rather than within the DHP?

3. If these opinions are so held more generally – or would be when the relevant numbers are run – what happens to the hope for administrative cost savings the DHP is meant to help address? Also, what happens to the negotiating power of a group whose member pool could potentially become reduced so quickly?

4. What else needs to be on the conversational table here?

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John:

As I recall from conversations about this with Church Medical Trust staff prior to General Convention in 2009, the "large buyer advantages" came in part because the risk pool would in fact be larger. The CMT office could negotiate for national or regional rates, and not simply diocese by diocese, arguing a national or larger regional populations. In addition, including lay professonals working more than half time would both add to the numbers in the risk pool, and somewhat reduce the average age of lives covered. The intent was, in fact, to negotiate rates in units larger than a diocese, even if dioceses could make individual decisions about coverage (as in, given a set of coverage parameters, the equitable deal in Missouri may be with someone different than in Ohio - perhaps with someone who doesn't even do business in Ohio).

As things have stood to date, an institution, whether a diocese as a whole, or an individual congregation within a diocese, can opt out of CMT coverage. This can make diocesan and congregational treasurers happy, but also makes for very uneven coverage across the Church. It also makes the risk pool smaller than even the diocesan roster (if one or more congregations opt out, even in a diocese that participates in CMT). The pool gets smaller and smaller, and arguably older.

Under the denominational health plan as passed, beginning next year institutions can't opt out, either for clergy or for eligible lay professionals. Clerics or eligible lay professionals can opt out as individuals, but have to register, to opt out, and to document alternative coverage (a spouse's work etc). So, diocesan or congregational treasurers can't independently impose reduced coverage just because it's cheaper.

At that time, too, representatives of the CMT stated that they would meet with diocesan or congregational representatives, and figure out how to meet or exceed the best deal that they can find locally. I don't know that it's always worked, but I fear much more that it's rarely been tried.

Trust me, if the Church Medical Trust could help West Missouri negotiate a rate taking in both dioceses in Missouri, it would make a difference for both diocesan risk pools (much less if they could negotiate based on national numbers, or even include Iowa, Illinois, Arkansas, Oklahoma, Kansas, and/or Nebraska). Most of the dioceses in these states are numerically small (Chicago being the notable exception). Starting to add them up, even if we couldn't get a national pool, could make a big difference.

Marshall Scott

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John B. Chilton

Marshall, if what the Ohio resolution says "Rationale" this isn't about risk pooling. Since a diocese's pool is still being paid for by the diocese (not saying that some or all of this isn't passed on to parishes of the clergy, etc.) there's not any savings for a diocese that would be the result of pooling.

Put another way, in essence clergy were covered before the DHP and after DHP.

Now it could be true that there's another ball in the air, the mandate to include lay employees that is changing the pool. But that's a separate issue.

The putative savings for the DHP were savings on administrative costs and large buyer advantages off negotiating better terms.

I'm not sure the DHP ever promised every diocese would be better off. I presume it was promising that most dioceses would be better off, and few might suffer for the greater good.

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Execute

I expect there will be several resolutions regarding the denominational health plan. The resolution passed in West Missouri calls for a three year delay in implementation for the development of a single denominational health plan, rather than national or regional negotiation offering a limited number of plans. I have been asking questions since before the last General Convention. As a chaplain working in an Episcopal health system, I have a distinctive perspective on insurance and insurors. Also, I was a Deputy who voted on (and voted for) the plan; and I am a Deputy who will be voting on some resolution this summer.

There is hope to level some inequities - especially between numerically large dioceses who can get low rates, and numerically small dioceses who can't - but there are difficulties. Since at this point health insurance plans (like other insurance plans) are regulated by the states and not the Federal government, what will work in one state won't work in another. That might make it difficult, for example, to have the same rates in Ohio as in Pennsylvania, Michigan, or Indiana. In fact coverage can vary within states. We experience in West Missouri that the best plan in Kansas City isn't available three hours south in Springfield. A single plan will have some benefits in a larger risk pool; and will probably save money in Missouri and cost money in New York.

The point was to find a way that would increase the risk pool beyond the diocese for purposes of negotiation. To that end, it seems to me that requiring all institutions to participate, and no longer allowing dioceses or congregations to opt out (while individuals can opt out) is as essential to the denominational health plan as the individual mandate is more widely to the Affordable Care Act. Without it, the risk pool remains chopped up and segmented - and the Church remains relatively weak in negotiating; and coverage remains expensive for those of us in the hinterlands.

There may be one argument for delay (not elimination or reversal), and that is to see full implementation of the Affordable Care Act. The changes that the ACA requires of insurers and of states will change the make a very different environment, and that will change the parameters for negotiating. However, in any case, seeking a way in which we're all in this together, maximizing the risk pool, is going to be an important goal.

Marshall Scott

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Jonathan Grieser

My friend Scott mentions negotiating healthcare in small-town Wisconsin. I have the privilege of living in Madison, 40 miles south, and with access to one of the best HMO's in the country. Although Group Health is an option in our Diocesan Health Plan, before I was called as Rector, Grace had negotiated a much better deal with Group Health on its own. We're covered (lay staff as well), much more cheaply than the diocese could do it, and in fear of what might happen if we are compelled to submit to a diocesan or national program. It's pretty clear to me that whatever was imagined when the original resolution was passed is far from what is being implemented, and we need to take a hard look whether it's worth proceeding. And it's not just that clergy and their families may suffer; it may mean that parishes will have to lay off staff in order to pay for coverage for others.

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Weiwen Ng

Without knowing more, it's hard to say. Plus I specialize more in Medicare and Medicaid than in commercial health insurance, so this reply is constructed using a general knowledge of health policy and an outline of knowledge of the health insurance world.

That said, it appears that the Episcopal Church is a little like the Federal government: TEC is 'self-insured', like a very large employer, but it appears to offer 20+ plans (so says the 2011 presentation by the Diocese of San Diego that was the first Google search) to church employees.

When the authors say that rates vary by each diocese's "past experience", they mean the claims history of insureds in that diocese. You can't get around this. Microsoft's insurance rate would also vary depending on how much services its employees used.

If they want the costs of insurance distributed equally between dioceses, then there's this to consider. Some places are just cheaper to live in than others. In some places, doctors seem to be more aggressive (possibly New York and Texas), and in some places they seem to be conservative (North Dakota, Minnesota). In Medicare, we don't exactly distribute the costs of insurance equally: our taxes vary depending on how rich each individual is. It's true that the Part B premiums are identical nationwide, but the Part D (drug) premiums do vary by region. In my view, it's acceptable to have the same rates diocese-wide. If we want one national rate, then DHP's structure probably needs to be quite different (true self-insured, rather than through 3rd parties, I think).

Let's assume that DHP does bargain with insurers on a diocese-by-diocese basis. It then offers multiple plans from multiple insurers in each diocese. If that's true, then it's possible that a diocese could get a lower rate by offering one plan, or two or three plans from one insurer. The diocese's employees could lose some choice.

But each diocese would need specialized staff to evaluate plans and negotiate rates. An individual diocese might not be able to get the same deal - the national plans all appear to have no cost sharing for preventive care, and claim to have "outstanding" mental health benefits.

This is a complex and thorny issue. I am not sure that the authors claim that the administrative savings from doing this through DHP are "very small" - the soft costs and actual costs might be bigger than they think. What are these folks' qualifications? Do they have experience negotiating contracts with employers, or do they work at an insurer or state regulator? If there's something to their claims this would be worthy of a study panel. But I haven't seen sufficient justification from the authors.

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