Cutting health costs: New percentage-pay pharmacy benefit, HRA on the…

By Jessica Connor

The conference is hoping to hold the line on health care spending, heading toward a new percentage-pay pharmacy benefit and beginning a slow-shift to a high-deductible health reimbursement arrangement.

In an effort to gain control of rising health care costs while still providing affordable, strong coverage for United Methodist clergy and staff across the state, the S.C. Conference Board of Pensions and Health Benefits is recommending to Annual Conference this June that there be no increase in health premiums for 2012. But, to temper rising healthcare costs that would have driven up premiums, they want to change the pharmacy benefit from a fixed co-payment to a percentage co-pay on any drug beyond a generic Tier 1.

This means that, if approved at Annual Conference, people will pay a 25 percent co-pay on preferred Tier 2 brand-name drugs, and a 30 percent co-pay on non-preferred Tier 3 brand-name drugs and prescription non-sedating antihistamines, like Zyrtec or Allegra.

For generic Tier 1 drugs, people will pay a fixed-rate co-pay: $12 at a retail pharmacy and $20 for Medco by Mail (a three-month supply).

“We’re sensitive to the fact that churches are holding the line on spending, so we felt it incumbent upon us to do the same,” said the Rev. David Anderson, conference pensions and health benefits officer, after the board’s March meeting.

As the General Board of Pension and Health Benefits is planning to make this percentage shift itself in 2013, Anderson said the conference board is attempting to “get ahead of the game” by shifting a year early.

Consumer-driven health plan

Taking this proactive mentality another step, the board is also looking to move from a traditional health insurance plan to a high-deductible plan with a funded HRA. Known as a consumer-driven health plan, an HRA allows the insured to use money in an account ($1,000 for individual, $2,000 for family, contributed by the employer) to pay for deductible and co-insurance amounts, or covered healthcare expenses: medical, dental, vision, pharmacy, etc. The annual deductible would be $2,000 for an individual and $4,000 for a family.

Similar to a health savings account and sanctioned by the Internal Revenue Service, an HRA would allow people to carry over any leftover money in the health account to future years. A pastor participating in a family plan who doesn’t use any of the $2,000 could see that account reach $10,000 in five years.

Anderson said, if approved, the conference would begin offering the HRA in 2012 to any clergy or staffer who chooses to participate, then shift the whole conference over to the HRA plan in 2013.

Throughout the second half of 2011, the conference would hold information sessions across South Carolina to educate people about how HRAs work.

Chairman Herman Lightsey said his board (which includes pastors) is constantly looking at health plans and doing the best it can for pastors and employees.

“We are trying to give them as much and as good a plan as we can, understanding the resources that we have,” Lightsey said. “If you look at the populace in general, all the private carriers and everything else, and you watch the news even in our state, what they’ve done is given people plans in the past that we can’t afford anymore. If you are going to have viable plans in the future, solvent, and give people a good benefit, we’ve got to shift. Otherwise, the conference cannot afford it.”

Such a shift is critical to controlling healthcare costs, Anderson said. After all, with an average clergy age of 57, costs are rising quickly.

Anderson said putting more responsibility on the shoulders of the insured would perhaps encourage people to talk more openly with healthcare providers and be more conservative about unnecessary medical procedures or drugs they might have done before without thinking, as insurance paid for everything.

“They’ve got more skin in the game,” Anderson said. “Hopefully, it will create better dialogue between doctor and patient, and reduce costs.”

The Rev. Sandra King, the Advocate’s health columnist, is skeptical that the HRA will be the best plan for the conference.

“HRAs can be beneficial for the conference because their cost is more controlled with this plan, but for the insured, the cost of an unexpected health event can be significant,” King said. “For those who are healthy and rarely need to see a doctor, the plan change will probably only result in higher out-of-pocket expenses for medications. But those who need surgery, medical procedures and tier 2 and 3 medications will see greater out-of-pocket expenses in deductible, actual costs and medications.”

King said she hopes the plan includes preventive care as a covered component of the benefit, which would naturally curb healthcare costs over time.

Pensions and retirement

Also at their March 12 meeting, the board recommended to keep pension contributions the same for 2012.

“There will be no increase,” Anderson said, a move that keeps a promise the board made at last year’s Annual Conference.

Currently, for full-time clergy it’s $578 per month for the defined benefit, 3 percent of compensation and 3 percent for death and disability.

As with the HRA shift, the board is seeking to be proactive about retirement planning, too. As they travel the state in 2012 holding HRA information sessions, they will also introduce the possibility of a market-driven retirement plan, where retirees would be able to pick any plan on the market. Anderson hopes people will be able to dialogue about this possibility, then bring it before the board for a possible recommendation in 2013.