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New Study: Health Care Premiums Skyrocket

October 2003

The health care crisis in this country is not an isolated trend. Newly published surveys indicate employer-sponsored health care premiums already have risen by nearly 14 percent in 2003—the third consecutive year of double-digit increases. Coupled with a sagging economy and many workers out of a job, these statistics are troublesome, making health care insurance an almost unaffordable luxury item for some. While the Seafarers Health and Benefits Plan is doing everything it can to help its membership maintain its comprehensive health care package, the continuing escalation of costs for health care premiums is making it increasingly difficult each time a contract is negotiated. The Plan is watching while governmental agencies, the private sector and other unions and companies ask their employees to pay a share of their health insurance premiums, a greater percentage of the final bill or require larger deductibles. In Madison, Wis., for example, the city is for the first time asking its employees in the four major labor unions to pay a share of their health insurance premiums and also is seeking a reduction in the compensation payments made to workers injured on the job. But the city of Madison is not alone. In fact, a new study indicates that in order to continue maintaining health care benefits at some level, 65 percent of employers increased the amount that employees pay for health insurance this year, 47 percent raised employees’ payments for prescription drugs, 34 percent increased deductibles and 34 percent raised co-payments for doctor visits. Deductibles and co-payments, which were uncommon only a few years ago, have recently been adopted by many plans. The cost of prescription drugs is one of the chief reasons for the soaring health care rates. The Seafarers Health and Benefits Plan is aware of this fact and is trying to implement a prescription drug network in order to keep the costs in check (see the notice on this page). The Seafarers LOG will continue to keep the readership informed about ways the health and benefits plan is trying to keep costs down.

Notice A Message from the Seafarers Plans Over the past few months, we have been reporting that the cost of health care has been rising at unprecedented rates. One of the most serious areas of concern is prescription drugs. Knowing that the cost of prescription drugs must be controlled, the Trustees of the Seafarers Health and Benefits Plan are considering implementing a prescription drug network as a two-year pilot program. Therefore, discussions with various Pharmacy Benefit Managers have begun. During these discussions, it became apparent that in order for a prescription drug program to work, we would need to review the eligibility requirement for the prescription drug benefit. Therefore, in order to proceed with these ongoing discussions, the Trustees of the Plan have instructed the Administrator to amend the eligibility requirement for the prescription drug benefit only. We repeat: The eligibility requirement for the prescription drug benefit only is being changed as follows: Once a participant accumulates 120 days of covered employment in a calendar year, then that participant and their eligible dependents will be entitled to participate in the prescription drug network for the entire following year. Additionally, if a participant accumulates at least 90 days of covered employment by September 30th of any year, then that participant and their eligible dependents would be covered from January 1st through June 30th of the following year. EXAMPLES: Seaman Jones works from March 1 through May 31 (92 days) and from October 5 through December 15 (72 days) for a total of 164 days. Since he has more than 120 days employment in the calendar year, then he would have eligibility for prescription drugs the entire following year. Seaman Smith works from March 1 through May 31 (92 days) however; he does not get any additional employment before the year ends. Since he has at least 90 days employment by September 30, then he would have eligibility for prescription drugs the first six months of the following year. Seaman Johnson works from August 2 through December 3 (124 days). Since he has at least 120 days in the calendar year then he would have eligibility for prescription drugs for the entire following year. Seaman Moore works from September 17 through December 20 (95 days). Although he has 90 days, those days were not accumulated prior to September 30 therefore he would need 120 days. Since he does not have 120 days he would not be covered for benefits. Once again, this change will affect eligibility for the prescription drug program only and is required so that in most cases the Plan will be able to forward eligibility lists on a timely basis to any pharmacy benefit manager. We realize that there will always be exceptions, which will be handled on a case-by-case basis. Also, please note that the initial eligibility rule of 75 days of covered employment for new participants will not change and therefore a new participant need only accumulate 75 days of employment in order to be covered for benefits. We hope that we might be able to contract with a Pharmacy Benefit Manager before the end of the year. We will keep you informed on the progress of these meetings and any other changes that will be required.