"We've offered our hourly-wage earners a health-care plan that's virtually identical to what we've provided to thousands of our salaried staff," Sikorsky spokesman Bud Grebey says. "It's a plan that gives them five options to choose health coverage that best meets their economic and medical needs."
The proposal in question, which is the major sticking point between the union and management, calls for a two-year and seven-week managed-care contract that kicks in on Jan. 1, 2007, and runs through Feb. 15, 2009. By the time that agreement expires, a Sikorsky employee with an individual health-care plan would pay a total of $1,009 more, while employees with coverage for themselves and their family members would pay an additional $3,528 over the life of the contract.
The Teamsters propose giving back part of the 3.5 percent pay raise over each of the next three
Despite repeated requests to Teamsters Local 1150 to turn over its proposed health care plan to federal mediators, Sikorsky management says the union failed to produce any document that Sikorsky's analysts can evaluate.
"The union says keep part of the wage increases and put the money into this health plan for us," Grebey says. "We think our plan accomplishes that and more so. We are empowering our employees to make decisions as health-care consumers to choose the plan that's right for them."
For instance, an employee who rarely becomes ill enough to require a doctor's visit or prescriptions could choose a high deductible option. That means the individual would foot the first $2,000 in medical bills with a 50-50-split beyond that with the company and a maximum out-of-pocket of $3,000. The price tag for the high-deductible individual plan is zero to the employee. And if they selected the high deductible family plan, requiring them to pay the first $5,000 in medical expenses before the 50-50 co-insurance split with Sikorsky kicks in, it would cost them $5.20 per week in 2007, rising to $6.90 per week by the end of the contract in 2009.
Sikorsky Aircraft is self-insured, a factor that insulates it and allows it to contain costs somewhat because it is immune from medical liability for its managed-care plans. In a series of full-page newspaper announcements, Sikorsky has sought to clarify why it refuses to accept the Teamsters givebacks in exchange for separate health-care coverage for union members.
Peter Gioia, an economist with the Connecticut Business and Industry Association, believes Sikorsky's stance is a sensible one.
"United Technologies Corp., Sikorky's parent company, wants a uniform structure for everyone," Gioia says. "And there is obviously significant administrative savings for them."
In 2002, Sikorsky claims it paid $9,800 per employee for their family medical coverage. Three years later, in 2005, that same level of employee-plus-family coverage cost the aircraft manufacturer $14,200. For 2006, that figure is projected to climb to more than $16,000 per worker.
By contrast, the Kaiser Family Foundation reports that nationwide in 2005 employers' share of their of their workers' health-care reached $11,000 on average. Connecticut has the second highest cost in the nation for employer-sponsored health care. It's second only to Alaska.
The Kaiser Family Foundation found that the average American company bears 75 percent of its employees-plus family medical care coverage. By the end of the proposed contract that is at the center of its stand-off with its 3,600 strikers, Sikorsky claims it would foot 82 percent of their actual health-care costs.
Even accepting its own projections as accurate, Sikorsky Aircraft concedes that such steep boosts in medical costs are cause for concern and warrant deeper analysis.
Stanford University Professor Alain C. Enthoven believes that a practical way to contain out-of-control health care expenditure by business is to invite more competition for underwriting medical coverage.
Employers' efforts to control costs were "temporarily successful" in the mid-1990s through managed care, Enthoven notes in Health Affairs, the Policy Journal of the Health Sphere. "For a few years, they brought the growth of health spending into line with the U.S. gross domestic product, mainly by squeezing provider payments and shortening hospital stays."
To drive down medical care costs these days, Enthoven suggests businesses engage in "managed competition." In other words, he advocates that companies invite a host of health-care plans to vie for each individual subscriber.
"The idea is for the employer to increase competition by offering employees a wide choice of carriers and plan designs& If a critical mass of employers were to do this in a market, they could create conditions in which efficient delivery systems could enter, market their superior value for money and achieve economies of scale," Enthoven states, adding that he also endorses "multi-employer arrangements," or exchanges, where various businesses and their workers can meet with numerous carriers and offer a variety of coverage and delivery options.
Jack Haskell, a labor-management consultant with Adams, Nash, Haskell & Sheridan in Hartford, says such proposals do merit further investigation.
"With health care, the way it is today, it's such a jungle. It's a mess to try to differentiate between Plan A, Plan B and Plan C. It takes an awful lot of work for companies to sort out the various plans and see if they are comparable and truly compare their costs," Haskell says. "This is more complex than a union trying to exchange a nickel for five pennies. Employers like UTC and Sikorsky just want to be consistent across all levels of staff and at all locations. And it's a lot easier for them to do this is if they are only dealing with a few plans."
Overall, inflation last year stood at 3.5 percent. At the same time, American workers realized a 2.7 percent wage increase. But the cost of health insurance in 2005 rose 9.2 percent. The only comfort with the hike was that it was less than 2004's 11.2 percent jump in health-care coverage costs.
These days, a trend among large-sized corporations with thousands of employees, like Sikorsky, are managed-care contracts with high-cost deductibles, Haskell says. They range anywhere from $1,000 to $5,000. At Griffin Hospital in Derby and at St. Vincent's Medical Center in Bridgeport, risk managers are seeing more patients presenting insurance cards that contain high-cost deductibles, requiring them to dig deeper and pay more of their medical care upfront before the plans will cover them.
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