wfn.org | [PCUSANEWS] Medical Plan dues going up 1% next July

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Note #7502 from PCUSA NEWS to PRESBYNEWS:

Medical Plan dues going up 1% next July
02437
October 31, 2002

Medical Plan dues going up 1% next July

Bill Forbes chosen as the pension board's VP for church relations

by Jerry L. Van Marter

SCOTTSDALE, AZ - The Board of Pensions (BOP) of the Presbyterian Church
(USA), responding to yet another crisis in the American healthcare system,
has voted to raise medical plan dues by 1 percent - to 17.5 percent of
effective salary.

The increase, approved during a meeting on Oct. 26, is the second in 18
months. It will go into effect on July 1, 2003.

Dues went up a one-half percent Jan. 1, 2002.

"The history of healthcare costs  shows periodic spikes," said John Cookson,
the BOP medical actuary from Milliman USA . 

"Unfortunately, we're in one of those peak periods right now." 

According to Cookson, current projections of healthcare expenses anticipate
annual increases of 15 percent to 17 percent. If the projections are correct,
the BOP medical plan's contingency reserve would drop below the board"s
requirement of at least 25 percent of annual claims and expenses next year,
and might disappear completely in 2004 without the proposed increase.

"We're probably OK for 2003," said Margaret Mellen, the board's senior
vice-president for healthcare design, "but by 2004 we're in real trouble.
It's prudent to make some adjustment in 2003 so we don't have a major
catch-up in 2004." 
Mellen said the 1 percent dues increase is worth about $6.75 million annually
and will bring in about $3.8 million in 2003.

"We were concerned about the direction costs seemed to be heading in when the
board met in July," BOP President Robert W. Maggs Jr. said, "but we had less
information for 2002 then. We were understandably reluctant to propose
adjustments  when we knew how tight church budgets are. So we recommended
that the Board wait for more data before acting."

"We know how important predictable benefits and costs are to the church
planning cycle and  budgeting process," said Jim Mortimer, vice chair of the
board's healthcare committee. "We realize this mid-year adjustment for 2003
disrupts that planning. We want to avoid this type of action whenever
possible."

Board member Ann Petersen, of Chicago, added, "As difficult as this is, we
have to do it." 

Without the savings from the board's participation in the BlueCard. PP0
network - expected to be about $60 million in 2002 - medical dues might have
jumped to 25 percent of effective salary, Mellen said, adding, "The
importance of those savings cannot be overemphasized."

The board also approved raises in the rates for the Medicare supplement,
medical continuation, affiliated benefits and seminary student healthcare
programs. 

Mortimer said the healthcare committee will meet in a special session on Jan.
30 to assess the short-range and medium-range outlook and discuss alternative
strategies for managing benefits and financing. "In these difficult financial
times, with so much pressure on healthcare costs, the results of these
discussions will be critical to the effectiveness of the board's work," he
said. 

The committee will discuss its preliminary findings with the full board
during its meeting on March 1, 2003. Tentative plans will be reviewed with
middle governing bodies, outlined in the Board Bulletin and other online
publications, and reported to next year's 215th General Assembly in Denver.
The BOP will consider recommended actions during its meeting next July, with
necessary changes to go into effect at the start of 2004.

       Investment performance is down

Richard E. Young, the chair of the investment committee, told the board: "We
cannot know where the financial markets are headed. So we stay the course and
do what we do best: invest for the long term, rather than react to
year-to-year fluctuations."  

The return on the board's investments for the nine months that ended on
September 30 was minus 14.7 percent. Over the same period, the Standard &
Poor 500 stocks were down by 28.2 percent and Nasdaq issues lost 39.9
percent. The board's portfolio is valued at just under $5 billion.

"The diversified nature of the Board of Pensions 'balanced investment
portfolio' makes it less susceptible to the tremendous losses that some
investors have experienced," Young said. "Notwithstanding that, the portfolio
has experienced losses from the downturn of the markets that will take years
to make up. But the investment committee thinks the portfolio is well
positioned for success as the markets recover." 

	       Other business

The board also approved a monthly rather than quarterly billing cycle for
churches and other employing organizations, effective next July 1; set Income
Supplement target levels for 2003 of $21,600 a year for single people and
$26,100 a year for couples; and approved 2002 Christmas gifts for Income
Supplement program members of $200 for singles and $400 for couples.

    Bill Forbes named VP for church relations

	
The BOP chose the Rev. William Ross Forbes, who since 1989 has served as
pastor of the Presbyterian Church of Westfield, NJ, as vice president for
church relations. He succeeds the Rev. Paul Stavrakos, who is retiring at the
end of this year.
	
Forbes is a graduate of Kansas Wesleyan University and Princeton Theological
Seminary and earned a Doctor of Ministry degree from the Graduate Theological
Foundation in Donaldson, IN. He has been pastor of churches in Princeton,
Atlanta and Houston and has worked as platform manager during numerous
General Assemblies.
	
He and his wife, Patty, have three grown children and two grandchildren.

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