WHEREAS:

As health care costs increase, some employers are offering to buy back employees' coverage. Typically, an employer will pay the employee to "opt-out" of employer-provided coverage so long as the employee has other coverage available. The employer pays the employee who elects to opt-out substantially less than the cost of the coverage; and

WHEREAS:

The cost of health care for most employers is determined using "experience rate" pricing, which means that the cost is determined by the actual claims of the group. Typically, healthier employees take the buy-back more often than those who have health problems. This leaves fewer employees in the plan to share the costs and those that are left generally have higher medical costs. As a result, the cost for members who stay in the plan increases; and

WHEREAS:

Employers are reacting to buy-back plans with proposals that are designed to move dependent coverage to other employers. These proposals include increasing the cost sharing for dependent coverage, charging more for coverage of a spouse if that spouse has employer coverage available, or by eliminating dependent coverage altogether. Buy-back plans are simply a method of shifting health care costs to other employers and they do not contain costs in any way.

THEREFORE BE IT RESOLVED:

That AFSCME councils and locals resist proposals for health care buy-back plans despite their short-term appeal and illusion of cost savings.

SUBMITTED BY:

Pete Benner, Delegate
AFSCME Council 6
Minnesota