August 19, 2015

Two UGA Retirees on the USG Health Care Changes


Below, the observations of two UGA retirees who attended Tuesday’s UGA-Aon Hewitt meeting at the Classic Center, held to explain the new retiree health benefits.

Joe Wisenbaker: As things stand now, the Regents of the University System of Georgia have approved changes to our health insurance and USG plans to contribute in 2016 the same amount to each retiree’s/spouse’s health reimbursement account account as it paid toward our USG health plan for us in 2015—working out to $2,763 per person. We’ll be able to use that money to pay for insurance purchased through the Aon Hewitt Health Exchange, USG dental or vision benefits, additional deductibles/copays uncovered by our insurance and Medicare, as well as other reimbursable health expenses.

They claim that this is going to save USG $6.8 million over what they project would have otherwise been necessary in 2016 under the USG health plan (with greater savings in subsequent years due to even higher projections). At the same time, Aon Hewitt has a sole-source, no-cost contract with USG to provide us a “private” insurance market along with individual on-the-phone counseling during some pre-determined hour of their choosing within the window of our “open enrollment” signup period, assistance in signing up for that plan and further help in resolving medical expense billing errors.

The insurance we can buy in the Aon Hewitt marketplace will include an as-yet unspecified number of Medigap, Medicare Part D and Medicare Advantage/Medicare Part C plans. Those specifics await the federal HCA’s approvals for 2016 plans—promised before the first scheduled counseling sessions.

The presentation offered by USG and Aon Hewitt in Athens Tuesday was remarkably well done insofar as looking at what we, as retirees, should expect going forward. They took audience questions on specifics and reasonably responded to them for another hour or so after their presentation. There was, however, no effort made to really explain much in the way of what led to the Board of Regents’ approval of those massive changes in the structure of the health benefit for retirees. We have only previously released arguments for those changes.

My questions/perceptions of what awaits me, my wife and our fellow retirees are as follows:

Considering USG’s take on our health benefit funding, USG’s “Health Care Basics” for 2015 provides a nice table with 2015 premium rates for retired employees, showing retiree and “employer” contributions for various situations involving dependents/spouses, choice of health insurance plan and Medicare enrollment status. Ignoring the Kaiser Senior Advantage Plan (only available in a handful of metro counties and not Clarke), the lowest claimed employer contribution for a single Medicare eligible retiree already enrolled in Medicare is $280 per month or $3,360 per year.

The $2,736 we’re told will go into our individual accounts is, therefore, at best 81 percent of that and way lower against any of the other listed “employer” contributions. I’m just not sure how the arithmetic works out that the total of what’s going into our “accounts” for next year is the same as USG’s contribution to our insurance for this year.

The overall USG savings ($6.8 million) for next year amounts to about $200 for each of us. I, frankly, would much rather have been able to keep our current plan and absorb a slightly higher premium or deductible. That would have been worth the time and effort we’re all going to be putting into what will be annual decision-making on our medical and drug insurance that for our initial enrollment far eclipses every other health care insurance decision I ever had to make.

As to Aon Hewitt: They did sign a sole-source, non-competitive and COST-FREE contract with USG back in March to provide our “private” insurance marketplace, counseling for each of us and managing our enrollment in one of the Medigap, Medicare Part D  and/or Medicare Advantage plans (a full listing of what will be available is promised by October 1).

When asked, the Aon Hewitt representative admitted that their money was to come in the form of unspecified fees and commissions to be rebated directly to them by the insurance companies. Their representative denied knowledge of just how much they anticipated those monies to be, and expressed no desire to ever know. All of that will not only pay for the work that Aon Hewitt is doing in setting up and operating our “private exchange” but will also afford them a level of profit justifying their investment of time and energy. Those are likely to represent very substantial sums, about which no information will ever be shared with us or even USG.

And, after several years if everything works out, what of the health insurance for the rest of USG’s current employees? How could USG not fall all over themselves to beg for Aon Hewitt’s leadership there as well? That pool would represent the kind of windfall that would put their earnings from dealing with retirees to shame. What nearly unlimited opportunity for corporate growth!

Together, USG and Aon Hewitt are saying that we’ll have choices that are almost sure to result in the same, if not better, coverage than what we have now. Or, at least, more in tune with our individual needs. The miracle of a larger insurance pool and our access to a free (though very much private) marketplace are said to ensure that outcome.  

So, why is all of this happening to us? We have been told that our current medical/drug benefit use and costs point to unsustainable growth and costs to USG in the future. Unsustainability is clearly a matter for debate. After all, USG has provided over the past few years retirement BONUSES to outgoing system presidents totaling millions of dollars! Maybe what we are experiencing is simply their way to balance their books.

Aon Hewitt or one of their subsidiaries has been providing position papers on the unsustainability of benefit packages in the pension plans of governments, universities and other non-profits for years. They or their work are often cited in planning documents written about pension benefits. They are certainly not alone in advancing that perspective. On the other hand, they seem to be alone in so profiting from its adoption.

If you look at their publicly traded stock prices (Aon PLC), what you’ll see is that over the last two years they have doubled! Over the last five years they have more than tripled. Clearly they are doing incredibly well at increasing the wealth of those who hold their stock in their portfolios.

The current membership of the USG Board of Regents reads like a who’s-who of the movers and shakers in Georgia's business community. All very bright and hard-working people with incredible success in the business world, along with being politically well connected. Any one of them who might not have the ability and skills to make wise investments in their own stock portfolios would have individuals or teams whose job it is to make those kind of wise decisions. How many of them have Aon PLC among their stocks?   

If, individually, it really works out that we can get the same or better medical and drug coverage under the new regime, and if Aon Hewitt can negotiate insurance plans on our behalf and make a profit doing it while providing individual counseling to over 30,000 of us this fall, then the USG must have grossly failed in its responsibility to Georgia’s taxpayers for a very long time. Our chancellor, the members of the Board of Regents and bureaucrats in the system office jointly share that blame.

And, stolen shamelessly from Wikipedia: "There's a sucker born every minute" - a phrase most likely spoken by David Hannum, in criticism of both P. T. Barnum, an American  showman of the mid 1800s, and his customers. The phrase is often credited to Barnum himself. It means, "Many people are gullible, and we can expect this to continue."

One only wonders what more may come…

Bert Richmond: My attendance at one of the USG-Aon health exchange meetings on Tuesday provided a classic example of an effort to lull UGA retirees into complacency by not telling us all of the story. Or, at least not emphasizing the most important part of the story from the viewpoint of USG. Early on, the audience was informed that USG wanted to be certain that each retiree was provided the same payment for their health insurance in 2016 that USG paid for them in 2015. What the USG rep did not emphasize is that the retiree may now have to pay more in 2016 for that same health insurance, because we are no longer in the pool with the younger and presumably healthier active employees of USG.

Previously, active employees and retirees paid the same premium for the same health insurance plan. Now, the health insurance company will be allowed to discriminate among retirees depending upon their age, health history, gender and location. Apparently, there are differential costs for health care depending upon where you receive the health care. (Certainly, health insurance companies will be seeking other exceptions to increase premiums and their profits). Bottom line: If you are older and have health problems, you can expect to pay more for your health insurance premiums.

They did not inform us of the amount of dollars USG is saving by casting its retirees adrift from the pool of all employees and retirees of USG. They also did not inform us how many millions Aon is receiving for this added layer of bureaucracy that USG retirees now face in getting health care. Neither USG nor health care insurers will pay Aon, so guess who will pay in increased premiums, reduced benefits or both. We can let you know about difficulties in clarifying charges, payments or receiving health care due to this added level of bureaucracy.

For any of us who wondered how the Republican “voucher” program of health care coverage might work, we now have the opportunity to experience it firsthand. When we were hired, we were promised that we would continue with a pension and with the same health care plan as when employed if we worked enough years. We wonder what happened to those promises. Verbal agreements were once honored in Georgia.