Frustrating health premium costs explained

In recent weeks, a number of members have contacted HSTA regarding health care premiums that increased on July 1. They were concerned because the 3.2 percent across-the-board pay raise that went into effect on Aug. 20 did little to offset those health care premium increases. Here are some of the common questions HSTA has received:

Q1. Why don’t we get free medical like some private businesses offer to their employees?

A1: The Hawaii Prepaid Health Care Act (HPHCA) requires private sector employers to provide at least half the health care costs for their employees where the individual employee’s share is no more than 1.5 percent of monthly wages. Costs beyond 1.5 percent would have to be paid by the employer. Many businesses choose to subsidize or cover the full cost.  Employees’ dependents (spouse and children) are not covered, so employees often have to pay a large cost to cover their family members.  Unfortunately, the HPHCA does not apply to federal, state or county employees.

Hawaii Prepaid Health Care Act fact sheet

Q2. Why won’t the state and DOE pay 100 percent of the premium for their employees?

A2:  Money.  Health benefits are a huge cost and have continued to rise more than seven percent per year since 2013. It would cost the State of Hawaii tens of millions more to cover 100 percent of the premium cost for HSTA members who make up one-third of all state government employees. If one union were to get 100 percent medical, all other unions would demand the same; and the total additional cost to the state would be more than $100 million a year.

Q3. Why doesn’t HSTA negotiate lower health care costs?

A3:  The state law is structured in a way that the HSTA cannot negotiate its members’ health care plans.  The two major medical insurers in Hawaii—Kaiser and HMSA—negotiate their rates directly with the State of Hawaii Employer-Union Health Benefits Trust Fund (EUTF). HSTA has only one representative on the 10-member EUTF Board of Trustees.  The trustees (five of which are employer representatives) negotiate with the two insurance programs over rates and benefits. When premiums rise, both the employee and the employer pay higher premiums. However, health care costs are rising faster than inflation and our salaries. Currently, the employer pays approximately 57 percent of all costs but are higher or lower depending on what plan each individual employee picks.

Q4: What is the State of Hawaii Employer-Union Health Benefits Trust Fund (EUTF)?

A4: While teachers were being furloughed in 2010, the state Legislature opted to sunset the HSTA VEBA Trust which allowed HSTA members to have their own health care plans.  The elimination of HSTA VEBA Trust plans was supposed to save the state money by consolidating HSTA members (with lower health care utilization rates) with all other state employees into the already existing EUTF. The state was sued over this move.  In late 2010, Circuit Court Judge Karl Sakamoto ruled in Kono v. Lingle that the EUTF needed to offer those covered under HSTA VEBA plans with EUTF plans that had the “same level of coverage.”  These plans are now listed as HSTA VB plans under the EUTF and are limited only to those who were in HSTA VEBA Trust plans. Unfortunately, his ruling did not prevent premium costs from increasing.

EUTF Rates

VB Rates

Q5. Why doesn’t HSTA bargain a better contract to lower health costs?

A5: We are trying. Under state law, HSTA can only bargain with the employer the specific dollar amount the employer will pay towards health care premiums.  Salaries, health care costs, class size reductions all come from the same pot of money. Since we are the only statewide funded school district with no local funds, we are competing with many other groups for funding. This is why HSTA has fought to increase revenue to go into education.

President Rosenlee’s message on health care costs

Hawaii teachers are the lowest paid in the country when you factor in Hawaii’s high cost of living.

“Because pay and health care coverage do not keep up with inflation, it becomes increasingly difficult to survive even though we love our jobs,” said HSTA President Corey Rosenlee. “Sadly, this has meant many qualified teachers in Hawaii are leaving the profession and we do not have enough teachers to fill positions. This situation is bad for teachers and our students. As a union, we need to take action to improve our schools.”

Our contract expires next June 30 and contract negotiations are underway. HSTA encourages its members to get involved by attending their chapter representative assemblies, participating in HSTA activities, submitting testimony to the Legislature, and remembering that as a union, we need to exercise our collective power to create change.