Despite the appearance that a majority of people in the audience had voiced their objection to changing health care providers, the San Benito County Board of Supervisors voted 4-0 (Margie Barrios being absent) to leave the Public Employees Medical and Hospital Care Act (PEMHCA) provided by the CalPERS’ Health Care network.
The board also voted 3-1, with Supervisor Jaime De La Cruz against, to switch coverage to the California State Association of Counties Excess Insurance Authority , a Joint Powers Authority formed by 29 California counties to provide cost-effective insurance and risk management for its members. The move will take effect Jan. 1, 2017, and will involve 492 full-time county employees and 200 retirees.
It was the retirees who spoke up at the meeting that resembled Congress as those for and against the change sat on opposite sides of the aisle, applauding whenever one of their kindred speakers finished at the podium, or remaining cordially mute at the opposing comments.
The straw that broke the camel’s back and the decision to switch health providers was a CalPERS’ 22 percent rate increase.
Georgia Cochran, of the county human resources office, said the county does not have any control over rates or plans that CalPERS offers. She said the county began a year ago to try to take control from being “victimized by double-digit rate increases.” She said the wording of the MOU has been changed to give some amount of control back to the county, which sent out a request for proposals to health providers.
Two responded: Keenan Associates and CSAC-EIA. The insurance committee, made up of various bargaining units, reviewed the proposals, but was not able to produce a clear direction, though some bargaining unit representatives did prefer to remain with CalPERS, and the other two providers were rated first by other representatives.
In the report from human services to the board, the staff warned that there would be both “…risks and rewards regardless of whether the county decides to make a change in health care providers or maintain the status quo and stay with CalPERS for another year.”
The report also stated that if the board made a decision to change, rates could decrease for the first year or two, but the county would have no control over future rate increases and it would be locked out of returning to CalPERS until Jan. 1, 2022.
“One thing we did not do,” she said, “was to reach out to the individual retirees. There’s some complications with that, trying to manage 200 individual ideas without a retiree’s association, complicated by the fact that SEIU (Service Employees International Union) has made it very clear, and rightfully so, that they represent those retirees who were in SEIU classes at the time of their retirement.”
Cochran said the retirees don’t have a legal seat at the bargaining table and that from the letters the county had received from them, there was not a consensus on what to do. She advised the board to listen to those who were present, and then make the decision about where the county wanted to go.
Supervisor Richard Rivas interrupted Cochran to remind everyone that there were only four supervisors present and that because of the Aug. 15 deadline to make a decision, he wanted to let them know that if the ultimate vote were to be 2-2, the resolution would fail and the county would remain with CalPERS, and the issue would have to be addressed in the future.
Cochran agreed with him and went on to say that the two plans up for consideration to replace CalPERS were good plans that mirrored, as close as possible, CalPERS’ plans in order to avoid confusion.
“Not one of these options before you is bad,” she said. “It’s all about where you want to take the county.”
When the conversation was opened to public, Elsie Marshall said her main problem with the process is that retirees had been excluded. She claimed that there has been a lot of misinformation and, as she understood it, CalPERS had been acting as the administrator of the plan and if a switch were to happen a county employee would be tasked to administer it, which would overwhelm them and possibly erode any savings. She advised the board to wait another year before deciding to leave CalPERS.
“I’ve talked to 60 or 70 retirees, and out of those, only one said they wanted to move out of CalPERS,” she said. “That shows you where they’re at, and I don’t think it’s a good idea.”
Susan Thompson said she heard about what was happening a week ago and that she realizes retirees are not legally part of the negotiation process.
“But we are your retirees,” she said. “Lots of folks in this group gave you 35 or 40 years of their lives. They would like to be part of a public conversation.”
Thompson cautioned the board about moving too fast and selecting what she called a “blue light special” plan that looks good the first year, but by the second year, “you’re going to get an increase that’s going to choke you.”
Curtis Hill, a retired sheriff who worked for the county nearly 35 years, said he understood the process to possibly switch providers began when CalPERS raised its rates by 22 percent. He voiced a caveat for not switching because in 1992, when the county chose CalPERS because the county was self-insured, claims made by just two people “broke the bank” on the insurance coverage. He said he has a lot of respect for CalPERS and the issue for him is that if the county leaves it won’t be able to return for five years.
Michael Silverman, SEIU president, said the union took the leadership role to get out of CalPERS after the 22 percent rate increase because union members needed relief.
“The workers that I represent are doing their best to live within their means,” he said. “We have been doing this for the last four years through layoffs, furloughs, healthcare increases, frozen step increases, retirement contribution increases, and of course, higher rents.”
Silverman said a member trying to cover their family for $750 a month, after paying rent, has very little left over for food and other expenses.
“Our members also know that even though they have healthcare, they can’t afford to get sick,” he said, “because they can’t afford to pay their portion of a visit. Twenty percent of a $5,000 procedure in the ER is still $1,000. Now it becomes a public health issue because going to the doctor may be delayed because of financial reasons.”
He went on to say the board would have the final say to opt out of CalPERS, and that the union was in favor of Keenan Associates.
Susie Caston, a Child Support Services employee, told the board they had a crucial decision and said the largest group of current “frontline workers” with the county was requesting that the board choose to leave CalPERS and select Keenan Associates. She referred to earlier comments about why the county should not leave CalPERS, saying they were, “…based on fear, misinformation from uninformed sources, or from county employees and management that make two to three times as your average SEIU worker.”
She, and others, warned that if the board did not leave CalPERS to choose a better provider it is essentially “embracing the idea of remaining a training ground for other counties that are willing to commit to providing affordable healthcare for their employees.”
After everyone who wanted to speak had their say, Supervisor Jaime De La Cruz said he his decision would be based on what was the “best fit for the community.”
“This is probably one of the most important decisions we’re going to make,” he said. “I’m wrestling whether we go with the retirees, because it looks like it’s the retirees versus the currant rank-and-file.”
This brought some disgruntled rumblings from the audience and he asked to have the floor.
“That’s the way I’m looking at it,” De La Cruz continued. “I understand how they feel, but for me, I look at it as providing health services to our employees, retirees, everyone. I just don’t like it when CalPERS sends us these 23 percent notices.”
Supervisor Robert Rivas wrapped it up by saying he believed it was only a matter of time before the decision would be made to opt out of CalPERS because of the rate increases.
“I’m looking for some stability and I’m leaning toward CSAC-EIA,” he said. “The long-term aspect is you have a known quantity, some ability to control those rates, and flexibility in working with them, as opposed to CalPERS.”