wfn.org | [PCUSANEWS] BOP raises Medical Plan dues again

[Deeanna Alford <dalford@CTR.PCUSA.ORG>]

 03285
July 16, 2003

 BOP raises Medical Plan dues again

Still-rising cost of healthcare blamed for 1 percent increase

by Jerry L. Van Marter

PHILADELPHIA - The Board of Pensions (BOP) of the Presbyterian Church
(USA) has raised Medical Plan dues by 1 percent to offset still-rising
healthcare costs.

The increase, to 18.5 percent of "effective salary," was approved
reluctantly but unanimously during the board's summer meeting here on July
12. It will take effect on Jan. 1.

With the change, combined Medical, Pension, Death and Disability dues will
exceed 30 percent of salary for the first time. Pension, Death and
Disability dues have been 12 percent since 1987.

With healthcare expenses and utilization both continuing to rise, the
board had no choice but to raise dues, said John Cookson, the BOP's medical
actuary. Without the increase - and three other, less sweeping "revenue
enhancements" approved during the meeting - the Medical Plan would lose
more than $9 million in 2004 and more than $22 million in 2005, more than
wiping out its contingency reserve, he said.

The BOP also voted to raise the minimum basis for participation in the
Medical Plan from 55 percent to 65 percent of the churchwide median salary
for pastors serving churches ($43,200 in 2003); to begin calculating dues
for part-time workers on a full-time equivalent basis; and to increase
copays for office visits to primary care providers and specialists from $15
and $25 to $25 and $35, respectively.

Cookson said the actions constitute "a good, reasonable strategy that may
spare the board from having to make more changes in 2005."

He told the board's healthcare committee that analysts have seen "some
indications" that the hyperbolic rise in healthcare costs of the past
several years may be "moderating." He said the BOP's current calculations
are based on an assumption of a 12.5 percent annual increase in costs.

"It's crazy out there, but a 10 percent trend would mean we'll be fine in
2005," Cookson said, speculating that the actual rate of increase probably
will fall somewhere 10 percent and 12.5 percent.

 The board also raised the subscription rates for the Affiliated Benefits
Program by 15 percent; for seminary students' medical coverage roughly
equivalent to the increase for active plan members; and dental coverage
through Aetna by as much as 10 percent (still in negotiation). Continuation
dues (for people who lose coverage when they lose their jobs or retire
prior to Medicare eligibility) will be decided at the October board meeting
but are expected to rise in proportion to the annual trend.

Mental health, substance-abuse benefits

The BOP voted to move administration for mental health and substance-abuse
benefits - a controversial move that will require separate deductible and
copay provisions for those services.

All claims processing and administration will be turned over to Value
Options, which handles case management and utilization reviews of benefits.
Those administrative services have been provided by Highmark, which handles
other Medical Plan processing and administration.

Margaret Mellen, the BOP's senior vice-president for healthcare design,
said that, while the change will iron out a messy administrative wrinkle
while maintaining parity of benefits, she admitted winning the support of
mental-health advocates in the PC(USA) will be a "communications
challenge."

She said, "We report to the General Assembly each year that the plan does
provide parity of mental health benefits, but we know that there are those
who are still concerned."

Mellen said she hopes to talk about the change during the annual meeting
of the Presbyterian Serious Mental Illness Network later this summer. "Our
intent is to maintain parity of benefits," she said, "and we'll do it ...
by coordinating the medical and mental health and substance-abuse benefits
so they're cost-neutral."

Preventive care: too few takers

Members of the board's healthcare committee expressed frustration that
preventive-care benefits are underutilized.

Said Mellen: "The board has put such extensive benefits into the plan for
preventive care, and we've tried our best to promote it. Yet we only have
25 percent utilization of the benefits by plan members. It's very
disappointing, and it's a struggle trying to figure out how to (increase
usage)."

The Rev. Jeff Aiken, a Presbyterian pastor and hospital governor from
Allentown, PA, added: "The health and financial effects of preventive care
simply cannot be overestimated. Some measures are so simple - don't smoke,
wear sunscreen in the summer, watch your diet - but people just don't
listen, until it's too late."

Investment performance improves

Since he became chair of the board's investment committee more than two
years ago, the Rev. Rick Young hasn't had much positive news to report.

At last his day has come.

As of June 30, he announced during the meeting, the BOP's $4.85 billion
investment portfolio had gained 11.1 percent for the year.

"This wonderful and grand start is the result of staying the course
through three horrendous years in a row," he said.

Young noted that the market is still extremely volatile, and that trying
to predict its future "is like wrestling Jell-O - there are no handles on
it."

Despite the poor results between 2000 and 2002, he said, the board's
investment goals for the current 10-year period "are right on target,"
though it will take a few years to rebuild reserves that were eroded during
the last three years.

A fond farewell

On several occasions during the meeting, the board celebrated the ministry
of the Rev. George T. Adams, who is retiring as the board's vice-president
and corporate secretary after 15 years.

During his 40-year career in the Presbyterian Church (USA), Adams cemented
a reputation for competence, blunt-spokenness and love of the church. The
kudos heaped on him clearly indicated how much he will be missed.

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