Members of the Writers Guild of America West will face higher health costs next year, the guild’s leaders have told members.
The missive was sent Monday to the 9,000 members of the WGA by president Howard Rodman, VP David A. Goodman, secretary-treasurer Aaron Mendelsohn, and executive director David Young.
The changes are due to concessions that the guild made in its negotiations with the Alliance of Motion Picture and Television Producers in order to shore up its health plan, which had been running at a deficit. The two sides reached a deal less than an hour before the contract expired on May 1.
“Our MBA deal includes both contribution increases from our employers and an agreement by the Guild to cut costs,” the missive said. “Basically, the companies agreed to increase contributions by $30 million annually and we agreed to make cuts that yield $7 million in savings annually. Now comes the tough part.”
The WGA had said during negotiations that the health plan would operate at a deficit of $65 million without employers boosting their contributions. In a May 5 message to members, the WGA provided details on how the AMPTP had agreed to hike their contribution through an increase from 9.5% of writers’ gross compensation to 10.5% at the start of the agreement, then increase to 11% in the second year and to 11.5% in the final year — resulting in a total of $65 million in additional contributions.
The guild also agreed to make cost savings of $7 million per year for the health fund, which has $150 million in annual spending. Details of how those savings were derived were disclosed Monday as having three components — increased deductibles, reduced payments for out-of-network services and an increase in prescription drug co-pay.
The WGA health plan is operated by trustees of the guild and the employers.
“Even with these changes, and despite the national crisis over health care inflation, our Health Fund is still the best plan in the entertainment industry and one of the very best in the country,” the letter said. “We intend to keep it that way. The company contribution increases coupled with the plan changes we are making should put us back in the black for the duration of this MBA and, we hope, beyond.”
Read the entire letter below.
As you know, the WGA Health Fund had been projected to run large deficits, including a $40 million annual deficit by 2019. Addressing this funding crisis was a major goal of our recently concluded, successful MBA negotiation.
Our MBA deal includes both contribution increases from our employers and an agreement by the Guild to cut costs. Basically, the companies agreed to increase contributions by $30 million annually and we agreed to make cuts that yield $7 million in savings annually.
Now comes the tough part. Starting in January of 2018, the Guild has agreed to make three changes to our plan, summarized below:
Increased Deductibles. Currently, before the Health Fund starts paying benefits, the participant pays an annual deductible of $300 per person up to a maximum of $900 per family. Starting in January of 2018 this cost will increase to $400 per person and a maximum of $1,200 per family.
Reduced Payments for Out-of-Network Services. After the deductible is met, the Fund currently pays 70% of the cost for out-of-network providers. If the participant or dependent reaches $2,500 in out of pocket expenditures in a calendar year, the Fund then pays 100%. Starting January 2018 the plan will pay 60% of these costs up to an annual out of pocket maximum of $20,000, and 100% thereafter. There will be no changes to the 85% the Fund pays for in-network care or the in-network out of pocket maximum of $1,000.
Increase in Prescription Drug Co-Pay. To incentivize the use of generic drugs, we are modestly increasing the costs of brand name drugs at both the pharmacy and by Express Scripts mail order. Generic drug costs will remain unchanged.
These decisions were guided by the following principles. First, all of us should bear some part of the cost of the changes, as is the case with the deductibles. Second, and perhaps most fundamentally, our Health Fund’s costs for out-of-network doctors and mental health providers have increased greatly and must be controlled. In essence, we are saying to all of us, as participants, that we can continue to see any provider that we choose, because choice is important to writers, but we can no longer afford to subsidize to such an extent providers who decline to join our network.
Our Fund has an extremely large group of in-network providers, including 92% of doctors nationwide and the top hospitals (Cedars, UCLA, NYU, etc.) We are protecting this robust network and its lower cost to the Fund by creating a greater incentive to use in-network services.
Even with these changes, and despite the national crisis over health care inflation, our Health Fund is still the best plan in the entertainment industry and one of the very best in the country. We intend to keep it that way. The company contribution increases coupled with the plan changes we are making should put us back in the black for the duration of this MBA and, we hope, beyond.
The Guild will continue to seek other ways to save money so as to maintain our current benefit levels. For example, just recently the Fund concluded a deal for prescription drugs that will save an additional $16 million over the next three years, with no changes in benefits.
Later this year all participants will receive formal notice of these changes from the Fund. The purpose of today’s communication is to explain in clear terms the changes the trustees made and to give you and your family time to consider their impact on you well in advance of the January 2018 implementation date.
If you have any questions or concerns, please reply to this email and we will respond. Thank you.
Howard Rodman – WGAW President
David Goodman – WGAW Vice President
Aaron Mendelsohn – WGAW Secretary-Treasurer
David Young – WGAW Executive Director