Wednesday, September 15, 2010

qotd: Hawaii teachers' health benefits threatened

Star Advertiser
September 15, 2010
Teachers sue over health plan
By Susan Essoyan

Hawaii public school teachers filed suit yesterday in Circuit Court to block changes in their health coverage, saying that the state's plan to do away with their health benefit trust fund is unconstitutional.

The suit, Kono et al. v. Lingle et al., seeks to represent more than 15,000 active and retired school teachers with health benefits in the Hawaii State Teachers Association Voluntary Employees' Beneficiary Association Trust.

The teachers are objecting to the state's plan to transfer their health benefit plans from "the financially sound" VEBA to the "insolvent or nearly insolvent" Employer-Union Health Benefits Trust Fund, according to the lawsuit.

"The forced transfer of the teachers into EUTF is designed to prop up that failing system on the backs of the teachers," said Paul Alston, attorney for the plaintiffs. "What they will get if they are forced to transfer is higher costs and inferior benefits. It is clearly unconstitutional to take away the valuable benefits the teachers have."

The suit contends that the change amounts to a breach of contract and violates the Hawaii Constitution by "diminishing or impairing" accrued benefits in the employees' retirement system. After the switch, teachers will face higher co-payments and curtailed drug coverage and services, it said.

The lawsuit also alleges that the state improperly took $3.96 million from the VEBA trust surplus, which otherwise would have been used as reserves, and put it into the general fund.

The Legislature passed a law to phase out the VEBA trust on Dec. 31, and assign teachers to Employer-Union Health Benefits Trust, which covers more than 94,000 state and county employees and retirees.

The court filing included an April 12 letter from Gov. Linda Lingle to legislators in which the governor called the Employer-Union Health Benefits Trust "insolvent," adding that "its governance is untenable." She noted that Aon Consulting, the trust's consultant, warned on March 31 that the trust fund would likely run out of money to cover expenses later this year.

Aon Consulting recommended a 26 percent increase in premiums as of July 1, but the Employer-Union Health Benefits Trust's board of trustees has voted to keep rates and benefits the same through December of this year.

Comment:  During Q&A at some of my speaking engagements, a common question from the audience: "Under a single payer, Medicare for all program, would I have to give up my excellent retired teachers' health benefit program that we fought so hard for all of these years?"

That's a very good question. These programs are often more comprehensive than Medicare. In fact, that is why we specify an improved Medicare as the framework for a single payer national health program. All essential health benefits would be included; deductibles, co-payments and coinsurance would be eliminated, and the administration of the program would be streamlined. There would be no need to maintain the teachers' health benefit program as a separate entity.

What is alarming about this report from Hawaii is that these sacrosanct programs are now vulnerable. The teachers' well-funded voluntary employees' beneficiary association trust (VEBA) is about to be dumped into the near-bankrupt health benefit trust established for other government employees. The double tragedy is that the teachers lose, and other government employees who should have the most secure of health benefit plans are also losing as more of their health care costs inevitably will be dumped on them.

If our best and most stable health insurance programs are facing this uncertain future, what does that say about the security of other private insurance programs within our fragmented system of financing health care?

The Patient Protection and Affordable Care Act (PPACA) rewards employers who dump their health benefit programs by requiring health care assessments that are only a fraction of what they pay in premiums for their existing insurance programs. Their employees then are forced, by mandate, to purchase plans within the exchanges. Though purchased through exchanges, these plans are merely a slightly more regulated reincarnation of the individual market - the least stable and least reliable of private insurance plans. The subsidies for these plans are the equivalent of vouchers, providing a mechanism for shifting ever more of health care costs to those individuals with the greatest health care needs.

The teachers of Hawaii are right to be concerned. They need to fight hard to protect their VEBA, at least long enough for us to enact an even better program for them and everyone else - an improved Medicare for all.

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