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06369 July 20, 2006
Rising costs send BOP Medical Plan dues up .5%
19.5 percent rate will be effective Jan. 1, 2007
by Jerry L. Van Marter
PHILADELPHIA * With health care costs continuing to rise annually by nearly 10 percent, the Board of Pensions (BOP) of the Presbyterian Church (U.S.A.) has voted to raise its Medical Plan dues by one-half percent, to 19.5 percent of "effective salary."
The increase, which brings total dues for medical plus pension benefits to 31.5 percent, is effective Jan. 1, 2007. The board approved the increase at its July 13-15 meeting here, along with subscription increases in related health care programs, such as the Affiliated Benefits Plan (an 8.8 percent increase) and medical coverage for seminary students (an increase commensurate with the Medical Plan dues increase).
Projections for the Medical Plan * which pays out about $150 million in benefits annually * are based on an 11 percent annual increase in health care costs. Recent results have been marginally better, said the Board's longtime medical actuary John Cookson of Milliman, Inc.
"Though the projections are pretty stable for the next couple years," Cookson told the board's Healthcare Committee, "but with no dues increase, the financial health of the plan looks to start dropping off dramatically by 2008 and will produce a deficit by 2010."
Though some financial advisors suggested a full 1 percent dues increase in 2007, BOP Senior Vice-president for Benefits Margaret Mellen said she believes the one-half percent increase "will shore up the plan now," adding that the board is concerned about the impact of any dues increase on employing organizations, "particularly small churches."
Linda Wilder, chair of the Healthcare Committee agreed. "We don't want to overreach and ask for more than we need."
One way to cut health care costs is for individuals to avail themselves of greater preventive health care, but one of the board's more innovative incentive programs is being underutilized, said Stewart Beltz, the BOP's director of welfare benefits design and funding.
The pilot program, Preventive Incentive, offered $100 to 4,700 Medical Plan members over the age of 50 if they would get a "preventive health examination" (annual physical). Before Preventive Incentive was introduced, Beltz said, only 23 percent of plan members got a routine annual physical.
"The response to Preventive Incentive has been lower than we hoped," Beltz said, "only 17 percent." The BOP is following up with eligible plan members, including those in the original pilot group who are still eligible for the incentive.
"Inertia is a powerful force," Beltz mused. "Behavior change takes time, but we're going to do our best to nag, persuade and stimulate those who are eligible to participate.
The BOP approved a contract with CIGNA to provide medical benefits to Presbyterian Church (U.S.A.) missionaries serving overseas. The plan, with no deductibles, will cost approximately $1.4 million annually to cover some 270 missionaries and their families, and is expected to provide much improved service for those needing medical care while serving overseas.
And the BOP voted to apply for participation in the Medicare Subsidy Program, a federal program tied to the new Medicare prescription drug benefit. The board is projected to receive about $6 million in Medicare subsidies this year and $6.5 million in 2007, funds that Mellen are a "pass through" to BOP Medicare Supplement subscribers in the form of lower premiums for their coverage.
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