Lawrence Livermore retirees lose choice of keeping their health plan
Lab retirees cry foul at health coverage switch
By Suzanne Bohan
San Jose Mercury News - Alameda County
December 5, 2008
One by one, Lawrence Livermore Laboratory retirees took the microphone at a forum this week, and described their confusion, anxiety and anger over dramatic changes under way with their retiree health care benefits.
The crowd of nearly 300 retired scientists, engineers, mechanics and other lab workers, along with some spouses, took to occasional taunts during a Wednesday morning presentation here by the new plan administrator and applauded at pointedly critical remarks.
This year, nearly 4,200 lab retirees and their spouses lose the group health coverage plan they have had. It was first provided by the University of California, which formerly managed Lawrence Livermore Laboratory. They then joined a group plan with virtually identical benefits offered by Lawrence Livermore National Security, or LLNS, a partnership including UC and Bechtel Corporation, which took over lab management in 2007.
And some 2,400 who took early retirement from the lab will also lose the lab’s group coverage when they turn 65 and become eligible for Medicare.
In its place, this year the lab’s Medicare-eligible retirees will join a new trend in the provision of health care benefits — called “defined contributions” — that allows employers to shift the cost of rising health care premiums onto recipients.
With defined contributions, an employer lays out a limited pot of money, typically annually, and the recipient uses it to purchase health care insurance on the open market, and to cover co-payments, deductibles and other health care expenses. Livermore lab retirees, and their spouses, will each get $2,400 annually. Any amount unused rolls over into the next year. But any costs beyond that are paid by the retiree.
Extend Health Inc., which is partly owned by America Online founder Steve Case’s Revolution Health, is now the contact point for lab retirees on Medicare. The firm acts as a health insurance broker, offering more than 170,000 plans nationwide from an array of insurers. Trained advisers work with retirees to sift though the options to find the best plan. Retirees then pay their premiums directly and are reimbursed from their $2,400 yearly allotment.
Alain Enthoven, an emeritus professor with Stanford University’s Graduate School of Business who sits on Extend Health’s advisory board, sympathized with the trauma of changing health plans but said the movement toward defined contributions is essential for controlling costs by making recipients more conscious of health care expenses, which have been rising every year since the late 1990s.
“What most people have is too good to be true,” said Enthoven, one of the early pioneers in the managed care movement.
“People are not going to go on having what they had in the past,” Enthoven continued. “It’s just not a sustainable model.”
Mark Beach, a spokesman for the AARP’s California office, agreed that health care reform requires more sharing of costs by individuals.
“Any intellectual worth their salt will say that’s a part of containing costs,” he said.
http://www.mercurynews.com/alamedacounty/ci_11151014
Comment:
By Don McCanne, MD
The current Democratic proposals for health care reform promise that you can keep the health insurance you have, if that’s what you prefer. This policy was included in the reform models to avoid losing the support of those who have been promised life-long coverage with very generous plans. Career scientists and engineers at the prestigious Lawrence Livermore Laboratory, managed by the University of California, were secure in knowing that nothing could happen to their excellent, life-long coverage offered as a perk to attract the best.
Enter Bechtel Corporation. After one year, their life-long retirement coverage is dropped, and they are given an annual defined contribution of $2400 to supplement the basic Medicare program. Just wait until the Medicare Advantage subsidies are cut back, and then see what they can purchase with that. None of them were given the option of keeping the plan they had.
Alain Enthoven says that their coverage was “too good to be true” and was “not sustainable.” So in his view what is sustainable is a shift to a defined contribution, which may make individuals better health insurance shoppers, but does so with the tradeoff of making access to actual health care less affordable. That has adverse health consequences.
Costs can be contained without creating financial barriers to care simply by adopting a single payer national health program. But according to AARP’s spokesman, apparently us intellectuals who would reduce patient cost sharing to improve access simply aren’t worth our salt. Now that really advances the health policy dialogue.
The important message here is that this is only one of thousands of examples where individuals who wanted to keep the insurance they had were not allowed to do so. It was not their choice. Some of the many reasons that individuals involuntarily lose their coverage were discussed in a previous Quote of the Day. Since our politicians are about to provide us with reform that allows us to keep the coverage we have, it would be of value to review that message now to see why keeping the coverage you have is only a fantasy for most of us.
http://www.pnhp.org/news/2008/july/keeping_the_insuran.php