Amid the avalanche of disheartening developments this year, few were as dispiriting in Hollywood as the Aug. 12 announcement by the SAG-AFTRA Health Plan that it was eliminating coverage for 11,750 of 32,000 participants, including 8,200 senior performers.
The plan and its trustees blamed the COVID-19 pandemic for creating $140 million in losses this year and projected that the reserves would be gone by 2024. Led by Ed Asner, 10 plaintiffs sued the plan and its trustees on Dec. 1 in a class action, alleging breach of fiduciary duty, as well as accusing its caretakers of engaging in a prohibited transaction and failing to disclose information material to plan participants.
On Friday, the SAG-AFTRA Healh Plan responded: ““The lawsuit filed against the Board of Trustees of the SAG-AFTRA Health Plan (and the former SAG-Producers Health Plan) is entirely without merit. The Board of Trustees has always taken its responsibilities very seriously, consulting with respected and experienced experts in connection with the Health Plan merger and the ongoing design of the Plan. The complaint misrepresents the facts and omits material information about the diligence that preceded the decision to merge as well as the circumstances leading to the recent benefit changes. We will vigorously contest this lawsuit and demonstrate that our actions were fully consistent with our legal responsibilities.”
As usual, the complicated dispute reflects the longstanding divide between the two major factions among the 160,000 members of SAG-AFTRA, which have rarely gotten along, even in the eight years since SAG and AFTRA merged into a single union. During the run-up to the merger, the progressive-leaning Membership First went to court unsuccessfully to stop the vote and health plan trustee took specific issue with SAG statements in ballot materials that “merging the unions would only benefit plan participants” and “merger is the best way to protect our benefits.”
Merger backers asserted that the SAG-AFTRA combo would increase bargaining strength and represent a first step toward solving the problem of performers not qualifying for coverage under separate SAG and AFTRA health and pension plans. Longtime trustee Robert Carlson asserted in 2012 that if the plans were to be merged, they would then be required to pay out more benefits without accruing additional income.
“This is a staggering financial burden which the plans cannot endure without either lowering benefits, increasing the qualification threshold or infusing additional funding into the plan,” Carlson said in 2012. “The financial burden that would result if the split earnings problem is ‘solved’ does not currently exist. This transparent outcome has been concealed from SAG members.”
Carlson was ousted from his Trustee post a few weeks later by the SAG national board. He told Variety that he found the benefit cuts deeply disturbing.
“Many have recently asked me if I feel vindicated that the very successful for years SAG Health Plan will be taken away from retired performers over 65 on Jan. 1 as I predicted in 2012,” he said. “How could one feel vindicated when thousands of old actors and others who have spent their entire careers, 30, 40 even 50 years and more being assured that this aspect of their retirement was secure for life?”
Asner’s suit alleged that the employer contribution levels for the SAG and AFTRA union members were disparate and resulted in far different contributions to the health plans for a given earnings level. SAG health trustees proceeded with the merger for “political purposes” and failed to disclose that the “benefit structure in the merged plan was in peril,” the suit alleged.
The separate health plans were merged at the start of 2017. Six months later in the TV/theatrical negotiations that year, the union obtained no increase for the health plan.
“We sought an increase to the pension plan in 2017 because the merged health plan was in its first year and operating at a surplus,” National Executive Director David White told Variety shortly before the suit was filed. “The pension plan needed the additional money.”
The suit also asserts that the SAG-AFTRA Health Plan Trustees knew soon after the plans merged that the health benefit structure was not sustainable. However, the trustees did not disclose that information to members of the union’s bargaining committees on the most recent successor deals for the commercials contract, a new Netflix contract and the feature-primetime TV contract, approved in June with $54 million of the $318 million in gains going to the health plan.
White insisted that the COVID-19 fallout was what drove the cuts.
“The health plan budgetary challenges we faced were significantly aggravated by the pandemic and production shutdown,” he added. “Had the pandemic not happened, we would not have needed this level of structural change nor would it have needed to happen so abruptly. Our challenge became an existential one due to the impact of the pandemic.”
White is named in the suit along with more than three dozen other trustees, including former SAG Presidents Richard Masur and Barry Gordon. The suit did not name Michael Estrada, CEO of the health plan, who told Variety that most senior performers will still be able to see their current physician and continue with their prescriptions.
“Many of our senior performer participants are saying the change is better than what they originally expected,” Estrada said. “A huge part of this is that Medicare continues to be the foundation for senior performers’ health coverage. This was the case and is still the case – no change. Many of our participants were not aware of this very important fact.”
The health plan lost about $50 million in 2018 and $50 million again in 2019 before being projected to lose $141 million this year. Estrada said the health plan in recent years experienced about a 3% annual growth in contributions while average healthcare costs have risen by 8% to 10%.
Masur, who’s 72, told Variety prior to the suit being filed, “I had 46 years of continuous coverage from the SAG plan. That made me very fortunate, but let’s face it — I have not been living in most Americans’ definition of the real healthcare world. It’s been confusing for a lot of us who were living in a very fortunate bubble. I am one of those people and I’m very happy with the plan I’ve been able to get. In some ways it’s better than what I would have had under the current plan.”
“The shutdown was a tremendous catalyst,” Masur added. “It left us with no wiggle room. We had to act quickly and decisively to preserve the plan. We couldn’t wait for six months or a year. We had a responsibility to act in the best interests of the participants. Rising costs were certainly a problem and the pandemic dramatically accelerated it. Fortunately, we were exploring certain changes even before the pandemic hit.”
Shortly after the suit was filed, a dozen high-profile members including Mark Hamill, Whoopi Goldberg, Matthew Modine and Morgan Freeman, criticized the upcoming benefit cuts for seniors in a “What Would You Do?” video released by the SOS Health Plan.
Sally Kirkland, who has 250 credits and an Oscar nomination on her resume, put it bluntly: “I think it’s downright cruel.”
Kirkland joined SAG in 1960, the same year the health plan was created by producers in exchange for actors giving up rights to pre-1960 movies. She estimates that she pulls in $80,000 a year in residuals — which are no longer counted in meeting the earnings requirements for the plan.
“Shelley Winters taught me at 18 to be a ‘union girl’ so I could always be independent,” she said. “Thank God for Ed Asner, Morgan Freeman, Whoopi Goldberg, Mark Hamill, and all the other saints.”
Modine, whose credits include “Full Metal Jacket” and “Stranger Things,” mounted an aggressive challenge last year through Membership First to incumbent SAG-AFTRA President Gabrielle Carteris, who has been in the top post since 2016. She and her allies in the moderate-leaning Unite For Strength and United Screen Actors Nationwide factions have been in control of SAG-AFTRA and SAG for a decade. He told Variety that he may run again next year.
“When a dear friend asked me to get involved and run for a local and national board seat, I imagined a boardroom filled with people working and getting in ‘good trouble’ on behalf of all our members,” Modine said, referencing the rallying cry of Civil Rights icon John Lewis. “I was disheartened to witness this current president and her faction continually fighting against other board members. It was a sad reflection of our national politics, eerily resembling a certain, stubborn, unbending side of a political party. If only the president of the union fought for our members with the same passion that she disparages and disregards people with whom she disagrees. Worse, the lack of transparency of this current leadership. There is no nice way to say this: It stinks of dishonesty and cronyism.”