MEDICAL COSTS BECOME THORNY ISSUE IN LABOR-MANAGEMENT NEGOTIATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00530R000400730004-9
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: August 27, 2012
• Sequence Number: 4
• Content Type: OPEN SOURCE

Declassified and Approved For Release 2012/08/27: CIA-RDP90-00530R000400730004-9
HEALTH BENEFITS CHANGING
Fewer companies are paying 100 percent of covered medical charges;
r more are offering plans that require employees to pay deductibles,
according to a survey of 240 large firms.
100%
PERCENT OF PLANS
REQUIRING EMPLOYEES
TO PAY FRONT-END
DEDUCTIBLE
40
? OW'
20-
0
PERCENT OF PLANS PAYING
ALL CHARGES. RATHER THAN
REQUIRING EMPLOYEE TO
PAY PART
1982
1983 1984
SOURCE: Hewitt Associates
19.85 19.86
1987
BY TOBEY?THE WASHINGTON POST
Medical Costs Become Thorny Issue
In Labor-Management Negotiations
By Albert B. Crenshaw
Washington Post Staff Writer
The issue that brought Potomac Electric
Power Co. workers to the brink of a strike
last week is one that is raising labor-manage-
ment tensions throughout corporate Ameri-
ca.
The question is health care?specifically,
who will pay what share of the cost?
Medical costs, fueled by new technology,
new diseases and other factors, are rising so
rapidly that the average company's medical
insurance premium has almost doubled in the
past five years, according to a study by
Hay/Huggins, a Philadelphia-based benefits
consulting firm.
"And that's just a continuation of a trend
that's been going on since the mid-1970s,"
said Michael Carter, senior vice president of
Hay/Huggins. "Companies have been doing
all sorts of things to try to control costs and
are still finding that they are not successful."
As a result, companies, including Pepco,
are seeking to shift some of the burden to
their employees.
Neither Pepco nor Local 1900 of the In-
See HEALTH, C7, Col. 5
Declassified and Approved For Release 2012/08/27: CIA-RDP90-00530R000400730004-9
Declassified and Approved For Release 2012/08/27: CIA-RDP90-00530R000400730004-9
...,..~IgmeryirrIGIM um Effic
HEALTH, From C1 percent of of companies have increas
the deductible that employees must
ternational Brotherhood of ElectKical pay before getting full coverage, 19
Workers would comment on the ten- percent have made hospital costs
tative three-year contract reached subject to a deductible, and 15 per-
last Friday, but a source familiar cent have increased the coinsurance
with the negotiations called medical amount.
costs a "predominant issue" in the
According to Hay/Huggins, the
bargaining,
average worker, who had $8 a
Pepco had sought to have union month deducted from his paycheck
workers begin to pick up a share of for health insurance in 1980, will see
the company's medical insurance $40 a month taken out this year?a
premium, which heretofore has been 400 percent increase. And these
paid entirely by the company. numbers do not include higher de-
The question was resolved in 'ductibles and coinsurance payments.
last-minute bargaining, though nei- A Hewitt survey of salaried em-
ther side would disclose the terms ployees found that in 1982, 43 per-
before today's ratification vote by cent of companies required no em-
the union members. ployee contribution for medical
But by making the demand, Pepco coverage, while last year only 29
placed itself among a growing major- percent did so.
ity of companies that believe em-
And it found the employee share
of costs rising. In 1982, for example,
ployees should share more of the
costs of their health care. 80 percent of hospitalization plans
paid 100 percent of room and board
Mark Murray, a partner with the
coverage, but last year only a third
consulting firm of Hewitt Associates,
paid 100 percent. Plans paying 80
said that he sees two forces at work
percent jumped from 9 percent in
as far as employers are concerned. 1982 to 37 percent last year.
The first is "pure cost containment,
Hewitt's Murray foresees con-
the issue being, 'If medical costs are
tinuing pressure along these lines,
growing at 15 to 20 percent a year, but with added emphasis on other
can we afford to pay that full in- cost-control items such as second
crease, or is it appropriate to ask our opinions and precertification for hos- I
employees to pay some?'" pital admissions.
The second is psychological, Mur- "It's a question of where the corn-
ray said. If the employee pays noth- pany wants to spend benefit dollars,"
ing, he has no incentive to hold down he said. Hewitt's surveys show that
costs, and if he does pay something, employees regard medical coverage
it appears from Hewitt's surveys to as the most important of their bene-
give a greater sense of appreciation fits, but he said "most employees
for the benefit, he said. recognize the squeeze when the
And the pressure is being felt by company goes at it in a straightfor-
white collar and blue collar workers ward manner" and are willing to
alike. A Hay/Huggins survey of bear some of the costs so that other
hourly compensation showed that 43 benefits can be maintained.
Declassified and Approved For Release 2012/08/27: CIA-RDP90-00530R000400730004-9
Declassified and Approved For Release 2012/08/27: CIA-RDP90-00530R000400730004-9
Declassified and Approved For Release 2012/08/27: CIA-RDP90-00530R000400730004-9