Successful Outcomes of a new Collective Bargaining Agreement

Hitting a grand slam in baseball is a pretty rare event, it happens, but multiple factors must be in place before the batter steps up to the plate. I was retained to help a local union with their health care negotiations during their most recent collective bargaining agreement. Our goal was to provide higher wages along with better health care for the union members. During these negotiations we were able to hit a grand slam for the members providing:

1.????? 4.88% average annual increase in wages over the next three years

2.????? 33.33% increase in the 401(k) match

3.????? No increases to member premiums for health and dental insurance coverage

4.????? No increases to pharmacy copays and no deviation from the open formulary

The wage increase was a home run with the largest annual increase applied in year one. Further, I used the geometric mean to calculate the average annual increase in wages over the next three years. The geometric mean rather than the arithmetic mean is used for a set of numbers whose values are meant to be multiplied together or are exponential in nature, such as a set of growth figures.

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The wage increase serves several initiatives the union has set forth. First, the wage increase provides an hourly wage for the members near the top of the wage range for similar unionized jobs in the area. Second, it ensures that the current best members remain on the job which will benefit the union, the municipality, and the community. Third, the new wage rates will be an incentive to work for the municipality during the region’s severe labor shortages which have negatively impacted all areas both private and public.

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The matching 401(k) increase also provides union members with one of the strongest self-directed retirement programs in the area. A dollar for dollar increase of 33.33% cements the union’s position to help secure a long term healthy and happy retirement for its members. The 401(k)-match increase is trend setting and is the new standard for future contracts with the municipality and other municipalities in the future.

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With the health and dental insurance, the union and I took an aggressive hardline approach with two goals in mind:

1.????? Reduce the total cost of insurance coverage under the self-insured model of the municipality; WHILE, AND

2.????? Increase member service, member experience, success of outcomes, and provide a healthier workplace for the members.

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Lowering total costs works only if the plan sponsor or owner has control over the plan and the goals and objectives benefit the members. It is imperative to create a healthy ecosystem focused on the members through a series of inflexible objectives. These objectives include a series of strategic partnerships with vendors and providers committed to cost control measures, outstanding member service and member experiences, and successful outcomes. Additionally, there is the need to embrace innovative technology and utilize new mediums of communications between members and providers. The best plans have models that center on the provider and the member, not the insurance carrier, and not simply the cost of the plan. The member or the member’s family does not solely bear the burden of successful outcomes.

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Finding the right vendor for heart health, diabetes management, and overall wellness is crucial to the overall health of the member and the employer. Sometimes the sum of the numbers is not justified in the addends. An example is a patient who is pre-diabetic is likely to develop:

1.????? Diabetes; then

1.????? Another major illness (vision, circulatory, kidney, or heart disease); then

1.????? Three major outcomes

a.????? Increased costs for care and medications

b.???? Lost work time and decreased productivity

c.?????Reduced quality of life for the member and his/her family

In the above example one diagnosis and one associated illness create at least three issues.

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We also settled on no changes to the prescription drug copays or the formulary. It is important when dealing with prescription drugs to understand who owns the relationship. Never let the PBM, healthcare administrator, or broker / consultant own that relationship. The relationship owner is the employer or the employer and the union members. To use a cliché or trite expression, as a fund administrator, broker, or healthcare consultant you must hold the pharmacy benefits manager’s (“PBM”) feet not to the fire but in the fire.

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To accomplish this an understanding of how a PBM makes money is needed and the ability and willingness to pursue each avenue of income aggressively. Go after rebate percentages, go after coupons, never let the PBM use a third party to manager rebates and coupons, understand all 200 – 600 parts of the contract or use a consultant that does, carve out generic drugs, explore and use biosimilars, explore and use a PBM that is endorsed by the union’s international, never let the stop loss provider choose the PBM, and clearly understand and know all the parties making money including the brokers and consultants.

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