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August 19, 2003

Everything you ever wanted to know about the Health Plan

(and maybe some things you did not)

2nd in a series of articles by President Patrick Quinn

Patrick Quinn

In last month's Equity News I wrote an article explaining the many reasons why our health plan is undergoing major changes. I have received a large response to that article, via the Internet and regular mail. The majority of those who responded were thankful for my explanation. Others understood the complexity of the issue but still had questions or offered alternatives, many of which I will enumerate and discuss below. And then there were those who just wanted to vent their rage by hurling expletives and hatred my way. Needless to say, I won't be repeating that here, and not because it was critical. Criticism I can take, sheer stupidity is a waste of my time and yours.

I hope the answers below will help to inform and engender more discussion about the difficulties that we are experiencing in our Health Plan, as well as the much larger healthcare crisis that is crippling our entire nation. This issue affects every member of Actors' Equity, and I thank you for taking the time to learn more.

  1. "Why are these changes going into effect on October 1, so quickly after the July 1st eligibility change? And why were we not advised of this crisis earlier?"
    The July 1st eligibility change (from 10 to 12 weeks of work) was announced last December. While the Trustees sincerely hoped that this would be enough to curtail the losses, it was clear by April that this was not to be the case. If the Fund was to survive, more changes had to be implemented. As to notice, in the Pension and Health Newsletter, "Now Playing,"(sent to all paid up Equity members), articles were printed in September 2002, and again in January and April 2003, warning that "additional cost-cutting measures" were to be implemented. These would include "more stringent eligibility rules and benefit reductions." Specifics were impossible to announce at that time, but as you can see, the Trustees were not silent on this point.
  2. "Why did Equity do this to me, right after I voted yes to the dues increase? Why should I pay dues if I can't get health insurance? Why do I even belong to Equity?"
    Your dues to Equity do not in any way, shape, or form, go to health insurance. Health insurance is an amount paid weekly by your employer to the Equity-League Pension and Health Fund, which by law is a totally separate entity from the union.
    Alright, let's try this again. Your dues to Equity do not in any way, shape, or form, go to health insurance. Health insurance is an amount paid weekly by your employer to the Equity-League Pension and Health Fund, which by law is a totally separate entity from the union. The health plan is administered by an equal number of Actor Trustees and Producer Trustees. Each side has one vote.
    Hopefully, last year you said yes to the first dues increase in 12 years because you understood that more money was needed by the union to negotiate and enforce contracts, increase your wages, protect your safety and working conditions, establish Equity-only auditions, battle the increasing threat of non-Equity tours, fund departments that assist you in problems with unemployment insurance, worker's comp, as well as sponsoring ongoing programs that aid members with taxes, meeting with agents and casting directors, lobbying governmental agencies, and yes, even the Equity News and the website as well. But not one cent of your dues goes to your health insurance, or for that matter, to your pension. Speaking of which, your Equity pension is one of the most important benefits of your membership. You may not see that now, but when you are at retirement age, I can promise that you will.
  3. "If we're losing so much money, why don't we buy cheaper insurance?"
    The Trustees have already made the difficult decision to do so. On October 1st, we will switch from the Union Labor Life Insurance Company/Blue Cross/Beech Street combo, to complete medical and prescription drug coverage from CIGNA, which will save the fund $2 million dollars annually. This is a financial boon, but was a difficult decision because the Trustees recognized that some participants would have to change doctors because of the switch of insurance carriers. However, because CIGNA's PPO network is so large, it will contain many doctors who were also providers on the previous insurance plans.
  4. "So then, if we're saving $2 million bucks, why did we have to increase our eligibility?"
    Because $2 million dollars is only 1/8th of $16 million dollars, the present annual deficit, and that is how much we have to save to break even. To eliminate that current deficit, we had to find ways to save another $14 million dollars. To keep the Plan from collapse, increasing the eligibility was the only major option. And remember, these savings will not be immediate, but will take at least a year to have any meaningful effect on the deficit. Until that time, the red ink will continue to flow.
  5. "I have ten weeks of work, why can't I make two extra payments myself, giving me the necessary 12 weeks?"
    This question is one that is asked a great deal, and the answer is quite complex, but very important to understand, so here goes: Your Health Plan's coverage uses actuarial assumptions based on the previous year's workweek history of the entire Equity membership. Basically, the experts tell the Fund how many weeks you personally, as a member, are going to work in that next year. (Wouldn't it be nice to have that "crystal ball" yourself?) The calculations include the sobering fact that a certain number of people will work, but will not be able to achieve eligibility. Knowing that this certain number of people will not achieve eligibility the actuaries earmark those specific health contributions by the producers to a pool of funds for the participants who will achieve eligibility. (See next question and answer). If these figures were artificially altered in any way by your being able to "buy" weeks of employment that you did not actually work, the entire equation would have to be recalculated. The end result would be that the eligibility that is now needed, (12 weeks for 6 months or 20 weeks for one year's coverage), would rise dramatically. If the eligibility did not rise, the fund would bankrupt itself.
  6. "Okay, so if I'm not going to get health insurance this year, why can't I have the money that the employer has paid in for me?"
    Simple. Because you may have insurance next year. All types of insurance are based on the theory of pooling funds. The truth is that those members who are covered by our health plan are subsidized by two groups: those who do not work 12 weeks in a year, and those who work more than 34 weeks in a year. Here's a fact that most people don't realize: the Health Plan needs approximately 34 weeks of contributions to pay for an individual's insurance coverage.
    Yes, I said 34 weeks……not 12 and not even 20.
    This means that for every actor who works more than 34 weeks, any contributions over 34 weeks made on their behalf goes into a pool to pay for those that have not worked 34 weeks. The same is true of those who do not get 12 weeks of work in that 12-month period. The money that was contributed on their behalf also goes into the pool, to pay for the actors who did reach 12 weeks. You may not be able to get insurance coverage this year, but next year when you are eligible, remember those two groups of actors who help in subsidizing your health insurance.
  7. "What if we did away with the Health Plan entirely, and just gave members the money that the producer contributes so the member could buy their own health coverage?"
    Well, that's certainly a possibility, but it wouldn't really be a feasible one, since the monies that most actors would accrue would not pay for any kind of worthwhile insurance coverage. When you are a part of the Health Plan "group," you are being insured at large discounts because of the thousands of other members who are in the group. Also, there is a "no pre-existing condition" clause in our health coverage that stipulates that you can never be turned down for coverage, and do not have to have medical exams to qualify. If you try to buy insurance on your own, you will find that it is outrageously expensive, and you may be denied coverage for a multitude of reasons.
  8. "I work at a LORT theater which has a group plan for its staff members. The producer says it would be cheaper to put us on the theater's own insurance. Why can't we do this?"
    For several reasons: If you were on that insurance policy, you would only be covered during the weeks that you are employed. There would be no "post employment coverage," which is the foundation of our health plan. However, the larger issue is that if the Health Plan allowed different groups to stop paying into the Fund and elect other coverage, then the Plan would become insolvent within a very short period of time.
  9. "Dental insurance is much more important to me than vision care. Why didn't we get rid of vision and keep dental?"
    Because optical insurance costs the Fund $300, 000 per year, while the dental coverage is more than $3.4 million a year. You do the math. The Dental Plan was only able to be instituted seven years ago because there was extra money from a bullish stock market that could underwrite it. As you know, those days are now over. Because of this, we have been forced to cancel the Dental Plan, returning us to the same scenario as in 1996, when, for those of you who may remember, there was also a "12 and 20 week eligibility" Medical Plan in effect. The 10-week eligibility that has just been altered was only in effect since the mid 1990's.
  10. "It has been mentioned that the Health Plan is investigating a self-pay Dental Plan. When will this be announced?"
    The Trustees are exploring self-pay plans and it is possible that by the time you read this, a decision may have been made. Look for the notice in the next "Now Playing" newsletter that should arrive very soon in the mail.
  11. "Is the bad news over? What other changes will be made in the future?"
    Unfortunately this is almost impossible to predict. The news in the future may be good, or it may be bad. In this volatile economy there is just no way to ascertain what will happen next. The trustees are hopeful that the change to CIGNA, the change in eligibility, and the reduction of benefits that are going into effect will balance the expenses against the income, and stability will be achieved. If the costs of healthcare continue to increase more than has been projected, future changes may be necessary. This could include, but not be limited to, higher deductibles, a decrease in benefits, the introduction of premiums, or possibly even a higher eligibility. Equity considers the negotiation of higher health contributions from all producers to be an extremely high priority in future contract talks. But for now, even in our present crisis, you can still obtain at least 6 months of coverage with only 12 weeks of work — and in this economic climate, that's an extremely good deal, unknown in other industries. There, after a 30 to 90 day waiting period, 12 weeks of work will get you 12 weeks of coverage. Period.
  12. "Speaking of premiums, why don't we go that route? AFTRA ($1,000 a year), and SAG ($600 a year) charge a premium to those members who are already eligible for health insurance, why don't we do that?"
    The trustees have strongly debated this option, and so far have decided against it. This premium could be much higher than SAG or AFTRA's, and could, because of the cost, actually work against members who need insurance. (In SAG, 34% of those eligible for health insurance through their earnings, chose not to accept insurance coverage because of the high cost of the premium.)
  13. "Why don't we switch to a 'catastrophic' insurance plan?"
    A catastrophic insurance plan is cheaper to offer, but has a very high deductible, sometimes as high as $5,000 and only offers benefits in times of extreme health crisis. Providing this kind of plan would leave the overwhelming majority of members without any real assistance with regular medical and prescription bills since the deductibles would be far higher than the typical amount of bills that a member accrues in a year. However, the trustees are investigating whether a separate insurance plan, in addition to what is in place now, might be offered to members who do not meet the criteria for regular coverage, but could possibly have access to catastrophic coverage. If the Health Plan can afford this type of coverage, it will be instituted. But, there are statistical and financial questions that would have to be answered first. It seems like an easy fix, but the impact of such insurance could have severe ramifications on the rest of the Health Plan.
  14. "Why does my producer have to pay health contributions if I am not going to work 12 weeks at that theater? He doesn't think that it is fair."
    Yeah, well that's a pretty lame excuse for not wanting to pay for your health coverage. Ours is a multi-employer health plan, so, just because you may not become eligible with your weeks from that job, you are able to use every week of employment, at every theater in which you work, towards your insurance coverage.
  15. "I think these new rules are more harmful to the 'regional' actor than to those living in New York."
    While it is true that the work opportunities in our office cities are generally higher than say, in liaison cities, the percentage of the membership employed is not that wildly different. Members who live in New York are going to be faced with the same challenge in trying to attain 12 or 20 weeks in a year as their brothers and sisters in the rest of the nation.
    Okay, this is just not true, and the statistics prove it. Some of the membership believes that if you live in New York, then you work all the time on and off Broadway. This is a fallacy. For example, there are 16,000 members living in New York. Of these, about 800 are now working in the city. This is 5-7% of the local membership. While it is true that the work opportunities in our office cities are generally higher than say, in liaison cities, the percentage of the membership employed is not that wildly different. Members who live in New York are going to be faced with the same challenge in trying to attain 12 or 20 weeks in a year as their brothers and sisters in the rest of the nation. I speak personally to this, because I'm one of them.
  16. "Was the Fund mismanaged? Is that why we are in this predicament?"
    No. The Fund is governed by Federal agencies and the mandatory reports that go to them are detailed and exacting. Every Health Plan in this country has had to deal with obscene increases in the cost of healthcare. The reasons for this are varied and I have discussed them in the last Equity News article. Suffice it to say, if our Blue Cross costs increase 47% in one year (and this is only one of the many increases we were hit with), something has to give. The Trustees base all of their decisions on what will be the best for the majority of the participants, as well as for the financial stability of the Health Fund. Any decisions that will have a negative impact on the participants are deliberated at great length, with financial, legal, and health experts to advise. The Trustees investigate a multitude of alternatives before any changes are instituted. The Actor Trustees must achieve eligibility the same way as any other participant, and all benefit changes impact on them the same as they impact on anyone else. Our Actor Trustees are, like you: actors, singers, dancers, stage managers, pensioners, and I can assure you that their deliberations are thorough, well-researched, and that the welfare of the actor is always paramount in their decisions.
  17. "So, if the Health Plan is in these dire straits, I assume the Pension Plan is also in trouble?"
    Nothing could be farther from the truth. In the last ten years, the Trustees have been able to increase the pensions of those members who have already retired, while making a major change in the accrual rates for those of us who will retire in the future. This means that when we retire, our pensions will be much larger than ever imagined ten years ago. Of course, the booming stock market of the 1990's was a major factor in these increases, but remember that the very Trustees who were responsible for investing our money wisely and creatively so that our pensions could achieve these huge gains, are the same trustees who govern the Health Plan.
  18. "So, who are these Trustees? How do they get selected?"
    The Trustees comprise two separate groups. The Equity Trustees are appointed by the Equity Council. The employers (Producers) have an equal number of Trustees, and any changes in our Health or Pension Plans are made by these two groups voting at a full Board meeting. Neither the Actor Trustees nor the Producer Trustees make any decisions by themselves. Both groups of Trustees, by law, are separate from any other organization. They are unpaid for their services, and not beholden to Equity or any employers group, and are held fiscally responsible to these Funds.
  19. "Well, if the Pension Plan is in such solid shape, why can't we use funds from there to shore up the beleaguered Health Plan?"
    This is exactly what happened in the early 1990's. Healthcare costs increased very quickly at that time, and the solution reached was to divert monies into the Health Fund before they reached the Pension Fund. This was done on an emergency basis, and fortunately, because of the strength in the stock market, this diversion of funds did not impact on our personal pensions to any critical degree. (As I mentioned before, during the same period of time, major pension improvements were achieved for all.) There would be two major reasons why that cannot happen again at this time: First, when this diversion of funds happened there was a strong message sent from the membership in which they made it quite clear that they did not approve of this use of their pension funds. Secondly, the stock market is not in any kind of a healthy cycle that would support any diversion of pension funds with the hope that our investment dividends would replace the loss of these monies.
  20. "Why doesn't the Fund just require that everyone join an HMO? Wouldn't that be a huge cost savings?"
    Well, this idea doesn't work on several levels. First, HMO's are usually local or regional, and there simply aren't HMO's in many areas where our members reside. Secondly, many HMO's have rejected our requests to be a part of our Plan. But, most importantly, members using an HMO just don't save the fund any money. There used to be large savings to the Fund between the cost for HMO's versus that of regular healthcare. Today, those costs to the Plan are equal. HMO's may be a good personal money saving choice for the actor, but in 2003, they no longer reduce the expense to the Health Plan. If one of our HMO's works for you, by all means take advantage of that option, but in the final analysis, it will not be a money saver to the Fund.
  21. "Is the same true of the PPO that the Health Plan offers?"
    A PPO is not the same as an HMO. You can use the doctors in a PPO and save yourself a great deal of money by the simple fact that your co-pay is only $25. In turn, that doctor charges the Health Plan less than he would have if he were not part of the PPO. On the other hand, if you need to visit a doctor that is not a member of the PPO, you may do so and, subject to a $350 a year deductible, you will be paid 70% of the reasonable and customary charge for the procedure. If you were in an HMO, you would not have this kind of flexibility. But it really depends on which section of the country you live in, and if an HMO that you respect is one that is offered by the Health Plan. Many members have found that using one of the thousands of PPO doctors is a very smart way to keep your medical bills down to a mere $25 a visit. When you go to a PPO doctor, you save money, and very importantly for the Health Fund, it saves money, too.
  22. "Why didn't I get to vote on these changes to the plan?"
    While Equity, your union, is a representational democracy, federal law mandates that the Pension and Health Fund must be a separate entity, with its own Board of Trustees. The Council of Actors' Equity, or its membership at large have no say in the decisions made by the Trustees, who are legally bound to make decisions that are fiscally sound for the Plan. With that in mind, they still do everything in their power to make decisions that are compassionate and what will be in the best interest for the most Actors.
  23. "I'll bet that Equity is providing health insurance for the staff. How come they don't lose their benefits if the members are losing theirs?"
    The staff will experience the same cuts in benefits as everyone in the Plan, and they do not have post employment coverage like the members do. They are covered only for the time they are working. (But let's get real... if someone works for you 52 weeks a year, don't you think it's fair that they have health insurance?)
  24. "Why can't we band together with SAG and AFTRA to help the individual member get eligibility in some Health Plan?"
    Okay, the glib answer would be "Did you notice what recently happened when, for the second time, SAG and AFTRA tried to merge?" However, all irony aside, the Equity-League Health Plan has tried for the last ten years to get SAG and/or AFTRA's Health Plans to join us, at the very least, in merging our drug plans, so that we could have increased buying power for our participants. For whatever their reasons, they have resisted even opening discussions. But, as to being able to use work in all three unions that on its own would not make an actor eligible for health insurance, (but combined it might), there is a larger point that is not being addressed. If all three Health Plans are swimming in red ink, which they are, where would the money come from to pay the medical bills of these added participants? And whose Health Plan would they join? It sounds like an easy fix, but unfortunately it would create even more financial chaos. But, there certainly may be angles and ideas that have not been thought of, so we will continue to communicate with SAG and AFTRA's Trustees to see if some workable solution can be found.
  25. "Equity lobbied in New York for the state to subsidize 50% of COBRA health payments for entertainment professionals whose insurance achieved by employment runs out. I don't live in New York, why aren't you lobbying my state capitol?"
    The Actors Fund of America spearheaded this campaign, with the assistance of all the entertainment unions in New York State. (Equity, SAG, AFTRA, IATSE, AFM, among others). This was a three-year battle that culminated with the State Senate and Assembly both passing the bill. However, it has not been signed into law yet, and is waiting for Governor George Pataki's signature. This campaign was made possible because of the sheer numbers of New York State entertainment union members and professionals involved. Because of entertainment union member density, the next state that would be targeted for this campaign would be California, but the fiscal nightmare in that state has all government assistance programs at a standstill. The Actors Fund is investigating if there are other states with this kind of health care initiative in the works in which entertainment professionals could be included. New York was the first tangible victory for Equity on this issue, but it is by no means our last effort, nor hopefully our last victory.
  26. "President Quinn asked that all Equity members be part of a grass roots effort to persuade our lawmakers to make massive changes in our health care system. Well, I can write my congressman, email my senators, and phone the White House, but what is Equity, as a union, going to do?"
    Very good question. During the last healthcare crisis in this nation in the early 1990's, the Council of Actors' Equity established a "National Health Committee." This committee worked with lobbyists in Washington, but when the Congress defeated the Clinton Administration's National Health Plan, the political atmosphere was such that no gains could be achieved in this area. Now that the country is suffering huge healthcare cost increases, and health plans are either downsizing or folding entirely, the number of uninsured or underinsured Americans is climbing at a dramatic rate. This number is now at 45 million, and many of those affected are members of the middle class. Surely this will be one of the largest issues that candidates for office will have to address in upcoming elections. For this reason, Equity has joined the National Health Coalition, a group of hundreds of unions and organizations whose purpose is to politically bring this issue to the forefront for important debate, on a state and national level. We have also reestablished the National Health Committee, and as a member living in New York, Chicago or Los Angeles you are not only invited, but urged, to join this important committee. Visit one of the Equity offices in these three cities and ask for a committee volunteer form. While you may feel that you can't make a difference by yourself, there is strength in numbers, and Equity will only be able to effect radical change with strong membership support. Your voice needs to be heard.

I hope that these questions you have asked and I have tried to answer will be of assistance in understanding the health crisis in our nation and in our Health Plan. I don't expect anyone to now find joy in our predicament, but I do hope that that these explanations will bring about more awareness and stimulate further discussion among the membership of Equity.

Patrick Quinn
August, 2003

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