The Retiree Health Working Group convened by UCOP has released an Interim Summary of different options for saving UC money.

The Working Group has not yet formulated its recommendations, which will go to President Napolitano on June 1. But it is safe to say that the overall impact of all these “savings” would be to increase costs for retirees.

It can be inferred from the Interim Summary that the Working Group is using assumptions of 7% for healthcare inflation and a limit of 4% for the University’s cost increase per year. The first number is at best a guess and the second is completely arbitrary. With the narrow perspective of such assumptions, the only possible outcome is increased costs and decreased benefits for faculty and staff.

This is a bigger long term issue for active faculty than it is for Emeriti faculty. While the latter will be affected immediately, decreases in University support for retiree health will potentially accumulate over the years. Thus they will have a bigger total negative impact on those who retire in the future.

For those who have better things to do than try to decode the entire Interim Summary, see pages 73-75, which show the estimated amount of money that UC would save as a result of various actions.

Unfortunately the savings goal is not stated. However we can make an informed guess about what kind of cost cutting is desired by OP. The University’s aggregate cost (not including retiree contributions) is roughly $500M. One percent of that is $5M. So likely they are looking for savings that are a few times $5M. So for example, without making any serious structural change, one can get $9.5M by having retirees contribute 20% of the cost of the Dental Plan (now free to retirees) along with implementing approximate contribution equivalency between non-Medicare age greater than 65 and Medicare enrollees. It would be getting too wonky to try to describe here what the latter actually means. The Interim Summary does explain it.

On page 74, the largest potential savings come from simply eliminating UC sponsored retiree health plans, giving retirees a flat subsidy, and casting them into the Medicare exchange in California. The next two biggest potential savings come from eliminating the high option Medicare supplemental plan or it plus the Medicare PPO and Seniority Plus plans and replacing them with a Medicare Advantage PPO. Since the savings involved are based on an assumption about the prices that would be bid to supply such a plan, the savings are actually very uncertain.

The Berkeley Emeriti Association has made a number of requests including calling for a one year discussion of the issues before a decision, which you can read here.

If you think that more time is needed for faculty and staff to consider the options and discuss them with the Working Group and with UCOP, then please use the contact info below to send your opinion to Working Group representatives.

Working Group members Robert Anderson (Emeriti representative) and John Meyer (Retiree representative) have setup email addresses to send them comments. For emeriti, the address is cuceaworking@gmail.com. The Senate does not appear to be soliciting input. The Working Group itself does not appear to have an email address. However the email addresses of all Working Group members are available. Those most relevant for faculty are:

Please also copy the Council of UC Faculty Associations (info@cucfa.org) so we have the benefit of your thoughts.

Time is of the essence.

More Details

The Working Group document is long (77 pages) and complex. It is for informational purposes. Between now and its deadline of June 1, the Working Group will meet on May 1 and May 14. Thus there are only a few weeks available for faculty and staff to evaluate a very complex issue and formulate input. This is an unreasonable expectation. Under these circumstances, it is very difficult to provide informed and thoughtful input to the Working Group.

The Working Group charter is here.

You will probably recall that a proposal to remove the University’s commitment to cover 70% of retiree health costs was a stealth action item for the July 2017 Regents meeting. Following massive protest, the item was removed, and after considerable delay, the Working Group was formed. Its first meeting was January 16, 2018. An acceptable charter was not issued until March. The first communications from the Working Group came in early April. Thus the time available to comment now is only slightly longer than it was before the July Regents meeting. Again this is unreasonable and does not indicate that UCOP and the Working Group are committed to meaningful dialog.

The interim report offers no policy principle or quantitative understanding for President Napolitano’s desire to scale back the University’s commitment to retiree health. It does not state either short term or long term goals. It does not say whether removing the 70% commitment is still on the table. Basically it is a list of possible cuts and estimates for the resulting decreases in costs to the University; it is about how to either cut retiree benefits, increase retiree costs, decrease retiree choice, or various combinations of all three. There is no discussion of whether or why this really needs to be done.

The Interim report does not address the many points that were made last year in letters objecting to cuts to retiree health and to a high handed attempt to get a Regents decision without any time for faculty or staff to provide input. In particular it does not address either the general point that a cut to retiree health is a cut to total remuneration and thus potentially yet another contributor to a decrease in faculty and staff excellence and then a decrease in the quality that the University can offer to students and to the state. Also it does not account for the Senate point made then that in coming years, the needed employer pension contributions will decrease, and that the savings could be directed to health costs.

It is also important to keep a focus on the quality of the actual coverage. If too much emphasis is placed on the 70% University contribution and not enough on plan coverage, then one could eventually end up with very inexpensive plans with very poor coverage. I.e. 70% of $0 is $0.