In the wake of a Facebook rant on the increase my healthcare insurance provider proposed this year, just north of 20 percent, a few colleagues wrote to ask my opinion on whether or not the Affordable Care Act (ACA) will have any impact on small to mid size budget orchestras.
I can’t claim to be an ACA expert and I would be surprised if anyone would be able to provide a reliable answer, but for most small budget orchestras, it seems that the ACA will have marginal impact. The only exception here will be those groups that provide some sort of flexible spending account that employees can use to purchase individual coverage.
In those situations, the benefit dollars may be able to purchase improved coverage but even then, it doesn’t appear that the ACA will be able to tip the scales for groups that haven’t been able to offer employer provided health insurance.
Whether or not the ACA will begin to lower overall health insurance costs and begin lowering premium costs for established is something I won’t even hazard a guess. But suffice to say, my confidence level in government and large corporations is not at what professional pollsters would categorize as “strong.” In fact, it would rank somewhere in the neighborhood of nonexistent so trusting them to work together to produce something that will benefit everyday citizens isn’t something I’d openly encourage.
Case in point, rate plans purchased on or before March 23, 2010 are entirely exempt from the majority of the ACA’s consumer protection measures.
ACA changes begin to transpire on October 1, 2013 and the dynamic impact on overall insurance rates is projected for early 2014. Pundits predict everything from debilitating rate increases to ushering in an age of healthcare insurance enlightenment. It doesn’t help that the current administration projects a mix of cost increases and cuts but in the end, current thinking estimates rates will increase for those with insurance and decrease for those without.
Regardless, it won’t likely have much impact on the orchestra field as a whole other than perhaps some of the top tier orchestras with Cadillac health care plans that offer near or full coverage for employees and spouses. Those stakeholders shouldn’t be surprised if they find themselves in some particularly ugly negotiation environments.
In the end, change is coming, and soon, so one way or another we’ll all be neck deep in results by this time next year.
7 thoughts on “Some Thoughts On Healthcare Costs And Orchestras”
for years I have been trying to spearhead some sort of use of ICSOM and ROPA to provide a huge buying group for health insurance. There could be A, B and C coverage ranging from Cadillac down to simply catastrophic only. ICSOM/ROPA could have an administrative staff that orchestras could buy into. I figured with the larger buying group coupled with the centralization of administrative costs, this would take some of the financial onus off of the individual orchestras.
The ACA may change things but such a nationwide orchestra group would have been problematic in the past due to the non-uniformity of policies, networks and coverage between states with the same provider company.
I know from having looked into something similar for arts organizations just within the same state, there were state government regulations and company policies that prohibited formation of buying groups between regions in the state.
The insurance lobbyists have been very effective on the state an national levels to make it near impossible for any such buying group formation. They will make exceptions if you are a single entity such as a major interstate corporation but a coalition of ‘small players’ is in for an uphill climb.
I think we’re much more likely to see this come up as an issue for the smaller orchestras. The big orchestras already offer Cadillac plans so they won’t be affected by the requirements to increase covered benefits. Plus – they can self-insure.
I have a friend with a benefits consulting business who says he now does nothing but calculate for employers whether or not they should continue to offer health coverage or just pay the fine and let their employees purchase their own through the exchanges or go on Medicaid. It’s all based on the size of the company and the compensation levels.
We’re already seeing colleges limit the teaching hours of adjunct faculty in order to avoid having them count as full-time employees. Will we see the 20-hours-a-week argument arise in this context?
What about orchestras with a small staff and a small core orchestra? They could conceivably characterize themselves as having less than 50 full-time employees and shift their health care costs to the employees and exchanges.
Lastly, will we see per-service orchestras with small, already underpaid staffs send their employees to the exchanges? What will this do the the quality of staff they can attract?
Theoretically, for some orchestras the cost of the employer fine, plus the cost of the employees’ subsidized rates at the exchanges could be less than the current cost of benefits. But shifting from employer-sponsored health care to government-subsidized health care is a significant foray into uncharted waters – especially for a change-averse field. (I would be skeptical.)
However, we shouldn’t try to pretend that these issues won’t come up. Everyone – management and union – should be doing the research to understand the issues and the new incentives, and be prepared to address them knowledgeably.
I think you’re touching on one of the more important overarching issues here Henry in that it would be in the field’s best interests to address these impending changes in an environment other than each group fending for itself at the next scheduled collective bargaining agreement negotiation. If anything there was a profound missed opportunity via the recent League conference and the upcoming AFM conference to make that a central point of discussions.
What I would hate to see is a CBA negotiation, and related labor relations, fall apart over this topic because neither side is properly informed or prepared.
Henry and Drew, great points. I will be addressing many of these issues in a presentation at the ROPA conference and SSD will likely be making additional resources available for bargaining on health care. Stay tuned…
For what its worth, my understanding is that the Milwaukee Symphony has been advised to plan for at least a 20% jump in health care costs next year, due to our “Cadillac” plan (a description that surprised me personally). My sense is that many modest-sized non-profits in the area are bracing for similar spikes, with some planning for a 30% jump. So the definition of “Cadillac” is definitely a factor, not just the size of a particular institution.
Keep in mind regarding the Flexible Spending Accounts that the ACA has already reduced the maximum allowable contribution to $2,500, down from $10,000 previously. This has already cost my family $2,750 in the first six months in out of pocket expenses. Don’t forget, once you can no longer designate sufficient funds to Flex, they become taxable income, which increases your tax liability and ultimately decreases your take home pay. My paycheck actually went down $108 per check ($216 month) as a result of this new regulation. So now I have $216 less a month in income, and full liability for medical expenses as Flex Account is no longer a viable option at only $2,500 (for a family with serious medical issues). Now we have 2014 to look forwad to as out premiums will go through the roof and availability of care could substantially decrease.