The first elements of the federal health care reform law are starting to take effect. Nationwide, some benefits are expanding, and that’s welcome news. But change in the US health care system is a complicated undertaking, and poses challenges for existing providers. How and when new rules take effect may vary, including for the PSC-CUNY Welfare Fund.
EXPANDING BENEFITS
Our Fund and almost all of the more than 100 public-sector union supplemental funds in New York City currently cover all children until age 19, and after that until age 23, as long as they are qualified as full-time students and are unmarried. The new law expands the eligibility of adult children up to age 26, and almost all restrictions within that age group are removed. There are no longer restrictions related to student status, marital status, residency or tax reporting. Effective July 1, 2011, this will mean that between 1,500 and 1,800 people between age 19 and age 26 will be covered by the Fund.
For these young people and their families, this is good news. Unfortunately the law does not require the employer – in this case CUNY – to increase benefit funding, and they haven’t. That’s not good news for the Fund. Fortunately, the added dependents in this age group are generally healthy and do not tend to use their benefits with high frequency.
Another benefit expansion scheduled to go into effect is the gradual removal of limitations such as annual or lifetime caps on key benefits plans. For our Welfare Fund, the only significant benefit so affected is the Medco prescription drug program, which currently provides coverage up to a maximum of $10,000 per person, per year. The health care reform law provides for a phased lifting that would place the cap at $750,000 in the first year.
Your Welfare Fund operates on a fixed income in much the same way as many pensions. While costs may increase, the income of the Welfare Fund remains a per capita contribution from CUNY that typically stays fixed over the course of a contract. To raise the Medco cap would mean a sizeable increase in costs (over $1,500,000, according to our benefit consultants), with no additional revenue to cover them. The only way for the Fund to implement this part of the health care reform law as scheduled would have been to reduce other benefits to pay for the increased cap. The legislation allows for funds in this situation to apply for a year-to-year waiver: the Fund did so, and a waiver was granted.
Without a waiver, we would have been forced to cut other benefits to pay for the higher cap. That is not the intent of the new law, and avoiding such unintended consequences is why the waiver provision exists. Because we were granted the waiver, no benefit changes had to be made. Most other welfare funds were in a similar position, and more than 1,000 waivers have been granted.
LOOKING AHEAD
As this example indicates, the new health care reform law is not perfect. Stronger options were available, such as a single-payer plan, a public option, stricter control over prescription drug prices, or stronger mandates on employers, any of which would have done more to provide an adequate funding stream or lower costs for expanded benefits. The new law will improve health care for millions of Americans, but it leaves many key problems in health care unresolved for Congress to address in the future.
Meanwhile entities like the PSC-CUNY Welfare Fund are working to find ways to meet new levels of responsibilities. The Fund will inform members as the implementation of the new law proceeds, and as the debate about more meaningful health care reform unfolds.
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Larry Morgan is the Director of the PSC-CUNY Welfare Fund.
