“Providence Health & Services is a not-for-profit Catholic healthcare ministry committed to providing for the needs of the communities it serves—especially for those who are poor and vulnerable.”
So reads the Providence website. But ask the members of SEIU Healthcare 1199NW what they think of the five-state healthcare giant’s commitment to vulnerable workers, and they paint a very different picture.
More than 700 union workers went on strike in Olympia, Washington, to protest the nonprofit’s unilateral decision while at the bargaining table to switch employees from an affordable healthcare plan to a high-deductible plan. These workers at Providence St. Peter Hospital—which include everyone but the doctors, registered nurses and social workers—and the Providence SoundHomeCare and Hospice earn an average of $31,000 annually.
SEIU says the deductibles increased on January 1 from $750 to $3,000 for family coverage, and the workers face higher co-pays as well. The Segal Company, a benefits and human resources consulting firm, estimates that the workers will pay a total of $75,000 more in premiums under the new plan while Providence will pay $437,000 less. The lower a worker is on the wage scale, the more regressive the new healthcare plan is.
The problem isn’t that Providence is lacking in resources: the company reported $286 million in profits in 2011, and the CEO’s compensation rose from $3.1 million in 2010 to $6.4 million in 2011; the senior VP and chief administration officer’s pay rose from $1.5 million to $3.3 million; and the executive VP, western Washington region, saw his pay increase from $2.4 million to $3.5 million.
“The major healthcare provider in Thurston County is going in the wrong direction for our community,” said Thurston County Commissioner Karen Valenzuela. “[Providence] is increasing costs on workers who are least able to afford it. It’s not a good thing for our community to have workers choosing between their healthcare and other basic needs.”
Providence claims that the high deductibles will largely be offset by payments to workers for participating in a wellness plan, resulting in net deductible increases of roughly $250 for individuals and $150 for families.
But an SEIU source close to the negotiations says that the documents Providence is sharing with the union “show very different things than what they are saying in public.” Further, the wellness initiative was in place last year and only half of the eligible union members were able to meet the requirements—partly because the requirements kept changing, and partly because it was difficult for employees with irregular work schedules to meet with specific providers at prescribed times.
“I now work a second a job just to be able to afford my family’s healthcare,” said Abbey Bruce, a certified nursing assistant at Providence St. Peter Hospital. “My husband has cystic fibrosis and needs to take enzymes to absorb his food. This used to be covered, but now it costs our family $300 a month. We work in a hospital, it’s outrageous that any of us have to work a second job or worry about how we’ll afford our care.”
This dispute is one that should be of concern not only to the SEIU workers in Olympia—and 6,000 SEIU hospital workers in Seattle with a contract that expires in 2015—but any employee who isn’t well off and in optimal health.
High-deductible “catastrophic” or “consumer directed health plans” shift the cost of healthcare from employers to employees and are a permitted form of coverage under the Affordable Care Act. According to SEIU, companies that have moved all or most of their workers to these plans include: JPMorgan, Wells Fargo, American Express, Whole Foods and General Electric. According to Towers Watson and the National Business Group on Health, nearly one-fifth of large companies said that catastrophic, high-deductible coverage will be the only kind of plan they offer in 2013.
Studies show that lower-wage workers in these high-deductible plans often skip necessary treatment in order to avoid high out-of-pocket expenses. A 2011 Rand study found a marked decrease in preventive care such as childhood vaccinations, cervical and colorectal cancer screening, and routine blood tests for people with diabetes. Even when catastrophic plans waived the deductible for preventive services, people in these plans still cut back on such care, fearing that a diagnosis would result in further expenses that they wouldn’t be able to afford. In fact, a Kaiser Family Foundation study found that people covered by catastrophic plans were twice as likely to report going without needed medical care as those in other health plans.
It’s not only the patients who suffer under this approach, providers also often take a hit. Ellis Medicine is the largest provider of hospital services to General Electric workers and retirees in the country. As of June 30 of last year it had reported $7.8 million in bad debt, up $1 million from the year before.
“My guess is that we are seeing more bad debt coming through our ER because of high deductibles,” Ellis Medicine CEO James Connolly told The Business Review.
SEIU says that there is a much better alternative for workers and providers. The union also represents registered nurses at Group Health, a local HMO that has come out against high-deductible plans. When Group Health needed to reduce employee healthcare costs, it joined SEIU in developing a wellness initiative to focus on smoking cessation, weight management and chronic disease management. The result is that healthcare inflation was held to a total of 4 percent over four years, and last year healthcare costs actually went down.
“We want to do this with Providence but they won’t come to the table and work with us,” said Bob Wilson, a surgical technologist at Providence St. Peter Hospital. “They prefer to slash and burn.”