Understanding the Denominational Health Plan and its implementation

The Rev. Susan Snook, Vicar of Church of the Nativity, Phoenix, Arizona, writes a detailed analysis of the current state of the Denominational Health Plan passed by General Convention in 2009 and the proposals coming before Convention this summer.

This is one of the things that General Convention will do that will have a practical effect on every Episcopalian in every congregation. So while this is an issue that doesn’t elicit high-minded theology or generate tons of blog and twitter traffic taking sides, there is incredible anxiety out there about the DHP because it is such a bread and butter issue.

There are a number of proposals coming before this summer’s Convention including proposals to delay implementation or suspend it altogether; proposals to allow insurance to be purchased from providers other than the DHP; and, proposals to equalize premiums across all the dioceses.

Snook analyses all these proposals, and explain in clear, non-technical language some of the technical issues that are involved in the health plan as well as their relative strengths and weaknesses. What she writes is useful not to deputies and bishops, but to anyone who has to plan for health care coverage in any congregation.

Justice for lay employees – this was the purpose of the Denominational Health Plan passed in 2009 (Resolution A177). After all, we have passed resolutions calling for universal health care coverage in the U.S. – why not take the first step and provide it to our own employees? Most of our clergy (at least those with full-time positions) are covered; it is the lay employees that are often left out of our benefit structures. Resolution A177 attempts to remedy this injustice.

It seems, however, that it is easier to call for justice when the payment is coming out of someone else’s pockets than it is to do justice when we have to pay for it ourselves. The Denominational Health Plan has caused a lot of anxiety because it increases employee benefit costs at a time of very tight budgets.

Snook begins by remind readers of the goals of the DHP:

The DHP ensures parity between health insurance benefits offered to clergy and lay employees, requiring that the same benefits be offered to both, as long as they work 1,500 hours or more per year (i.e., ¾ time or more).

The DHP requires that health insurance be purchased from the Church Pension Group’s Episcopal Medical Trust. The Medical Trust is not a direct provider of health insurance; instead, it negotiates with providers such as Blue Cross, Aetna, etc., to come up with plans for each region of the country.

The 2009 legislation asks dioceses to come up with specific regulations for implementing the plan, including questions of whether employees of diocesan schools and other non-church organizations must be included, how much of the cost the employee is required to share, whether domestic partner benefits must be included, etc.

The DHP comes into effect on Jan. 1, 2013.

Snook then looks at the implications for allowing for delay, or making it possible to buy outside of the DHP or what would happen if premiums were equalized across every diocese.

Delaying implementation could put a few parishes but perhaps several dioceses, with many missions or with centralized payroll systems, at risk for penalties under Healthcare Reform

… the new Healthcare Reform law (if upheld) could impose penalties beginning in 2014 on employers who have 50 or more employees and who don’t provide adequate insurance…. Most parishes do not have 50 employees, but this penalty could affect dioceses, which are the legal employers of all mission congregation employees. The penalty is $2,000 per employee, so it could add up to $100,000 if there are 50 employees!

She speaks to the implications if congregations were allowed to opt-out and buy on their own.

Other things being equal, the general effect of requiring all employees, all congregations, and all dioceses to be covered through CPG is that the average cost of insurance through CPG goes down substantially. That’s because the younger, cheaper folks can’t opt out, and they bring down the average age of the whole group, saving money for everyone.

Yes, I know it sounds reasonable to allow everyone to buy insurance where they want to. It’s a free country, right? But we need to understand the economic effects of the free market on the insurance world before we start waving that free-market banner. (And, with 50 million uninsured Americans, I’m not sure we can hold up the free market as a good health insurance exemplar.)

About equalizing premiums regardless of market or geography:

If you live in New York City, Miami, Chicago, etc., you probably pay health insurance costs above average for the country. Therefore equalizing premiums on a national basis will mean your costs will go down.

However, if you live in Los Angeles, Denver, Dallas, Seattle, Atlanta, or Phoenix, you probably pay health insurance costs significantly below average. If we equalize costs across the country, your premiums are going to go UP. In effect, you are going to be paying more in order to subsidize the higher health costs in New York City and elsewhere.

Maybe this is a fair result, and maybe it is a good thing for cheaper regions to subsidize more expensive ones. But we need to understand that this is the result we would be voting for. I’m not saying it’s bad – you be the judge.

The Diocese of Olympia proposes removing the implementation date, in effect making the DHP entirely voluntary, wiping out the rational for the plan at the core. According to Snook, the Diocese of Olympia believes that two things will happen if DHP passes: 1) parishes will reduce the hours of lay employees to avoid insuring them; and, 2) parishes pay for DHP minimums, which could be a reduction of coverage for some clergy and lay employees. She writes:

Really, guys, here I just have to say – you don’t have to wipe out the entire DHP in order to solve this problem. You don’t even have to bring anything to the attention of General Convention. If this kind of finagling by vestries is a problem in the Diocese of Olympia, my suggestion would be that Olympia pass a diocesan resolution that prohibits vestries from doing it. Period, end of story….

….Please note: +Greg Rickel, the Bishop of Olympia, has shared with me (and given me permission to share with you, Gentle Reader) that he does not support Olympia’s proposed resolution. Here is a direct quote from Bishop Rickel, shared with his permission: “Time will not solve any of the issues they bring up, and that is all this offers, for us to wait, yet again, to do what we call on the rest of the world to do at every convention.”

As Bishop Rickel points out, The Episcopal Church is good at proclaiming that other people should act justly, but not so good at acting justly ourselves when it costs us money. I’ll let the irony of that statement speak for itself.

Snook ends with some proposals that could save some money:

But what should we do about the fact that the DHP costs money, and we don’t have so much money these days? How should we encourage ministry to keep happening, employees to keep being employed, and churches to keep running even as we are mandating increased employment costs?

I think we can do this without making any changes to the 2009 legislation at all. Let me point out that the DHP legislation allows dioceses to set minimum coverage and cost-sharing guidelines for churches. We don’t HAVE to pay 100% of a very rich benefit plan and include the entire family of every employee, even though that is often done for clergy under the current system. A diocese could create different rules.

In fact, although A177 does not specifically allow it, a diocese could achieve parity for clergy and lay employees over a period of years by creating a phase-in scheme. According to a CPG representative I corresponded with, although A177 does not provide for a phase-in scheme on the parity rules, the bishop of each diocese is the one responsible for enforcing the canons of the church. Therefore, if a diocesan scheme satisfies the bishop that it will achieve the goal of parity in a reasonable period of time, CPG is not going to play compliance police.

She offers what a phase-in might look like on a diocesan level.

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