March 25, 2018

Joint Labor Management Insurance Committee (JLMIC) History

So, how did we arrive in this particular place. TEA joined the JLMIC in 2012 as an active member. Prior to that time, we would be moved onto the benefit plans JLMIC had bargained with the County only when we signed our subsequent Collective Bargaining Agreement. In 2011, the County made a concerted effort to bring other unions like TEA into the JLMIC family where all would benefit from the lower insurance costs available to a larger pool of insured members. Most of the County workforce is now covered by a JLMIC-bargained plan.

JLMIC is chartered to bargain medical benefit plans and the County signs an exclusive agreement with them to do just that on behalf of all unions in the JLMIC medical plans.

Each year, the JLMIC considers changes in the plans in order to keep costs at reasonable levels. Likewise, each year the County reaches agreement with the JLMIC regarding a funding rate it will assess against each Department in order to cover projected health care costs for the year. That money goes into a pool, and the County pays actual expenses from that pool of money. Every surgery, medicine, the cost of health care plans and administration, fixed amounts for your dental insurance and vision plan all are paid out of that pool. The County employs a consultant to project medical cost increases for the coming year, and this information is considered when setting the funding rate for the next year.

However, by 2010, medical increases were reaching 10% or more each year. In answer, the County employed the Healthy Incentives Program in an attempt to have employees focus more on their individual health, and hopefully, to save the County money. It worked. By 2012, the program had saved the County some $60 million of the money it had collected from the Departments. However, the savings potential was nearing an end. The County wanted certainty about its budget, and the medical care costs were not very predictable.

A new scheme was crafted by the County and JLMIC to change health care from a defined benefit to a defined contribution. Beginning with the 2014-2016 JLMIC Agreement, $25 million of that savings was placed into a Protected Fund Reserve that would be used to guard against medical care costs that were higher than the County actually collected from the Departments. For each of the three years of that agreement, the County agreed to increase the amount it collected to cover your health care costs by 4% over the rate for the previous year, but not more. In the event that this was more money than needed to pay actual costs, the balance would be added to the Reserve. If costs were higher than projected, then the Reserve would pay the difference. Because medical expenses were projected to increase more than 6% each year for that period, it was anticipated by the County and the JLMIC that the Reserve would last only 3-4 years without further changes.

As it happened, the JLMIC made changes that improved this performance. The County negotiated cheaper pharmacy benefits. Actual medical expenses were less than expected. And the Reserve grew. By 2016, the Reserve was projected to be more than $40 million.

In 2015, JLMIC began crafting benefits for 2017/18 and the next JLMIC agreement. At the same time, the County was bargaining a “Total Compensation” model with the unions that are funded by tax revenues. Under that model, a coalition of unions jointly negotiate a master agreement for big economic items like wages and healthcare. Tax revenues are limited by a property tax initiative and can't always be adjusted to keep up with inflation. The County told those unions that they needed to balance COLA increases with Medical increases because there was a limited amount of revenue to fund them. By comparison, wastewater raises its rates every two years to fund its obligations, and does have some ability to keep pace with inflation.

During JLMIC bargaining in July 2015, the County floated an idea: Total Compensation bargaining might need to send the benefit package back to JLMIC for adjustment if there was not enough money for the Total Compensation unions to fund other needs. We objected, pointing out that this would mean those other unions were, in effect, bargaining our benefits, and not the JLMIC. There would be no point for the unions not affected by Total Compensation to continue in JLMIC. The County chair for JLMIC told the union representatives at the JLMIC “well, then we will never do that”. What happened next was actually worse.

A County negotiator for both JLMIC and Total Compensation hatched a plan that he presented to his bargaining strategy team in October of 2015. He would take up to $16 million from the Reserve and use it to fund the cost of total compensation. The County strategy team agreed to this plan. The problem with his plan was that those funds were only to be used for medical costs unless otherwise agreed by the JLMIC.But the plan was never presented to JLMIC. Further, his plan would only benefit the unions included in total compensation. But the Reserve was funded and maintained to protect the medical costs of all of the JLMIC unions.As a consequence, those funds belonged to all of the JLMIC unions, including TEA.

Over in total compensation bargaining, and without the approval or ratification of JLMIC, the County and the total compensation unions forged a new 2017-2018 agreement which changed medical benefits for all of the County. This was in direct violation of the 2014-2016 JLMIC agreement then in effect which granted benefits bargaining for JLMIC unions to JLMIC exclusively. The total compensation parties agreed to a 0% increase in the medical funding rate for 2017 over the amount funded in 2016, projecting a nearly $12 million dollar decrease to the Reserve over the 2017-2018 period as a result. The County offered the Total Compensation unions a 1.75% general wage increase for 2017, and a 0.5% bonuswage increase if they signed the Total Compensation tentative agreement, which included this 2017-2018 medical benefits agreement. The Total Compensation agreement also extended a 1.75% general wage increase for 2018 to those unions that signed the agreement, and a further 1% bonus wage increase if all of them agreed to a Master Labor Agreement which had not yet been crafted. In order to get the bonus, they would have to agree in advance to contract language they did not yet know.

In October 2016, just a few days after the total compensation unions agreed to this plan by tentative agreement, the County brought the medical benefits agreement to the JLMIC to get their approval. I asked Megan Pedersen how this would affect the future of JLMIC and the protected fund reserve. Were they breaking up the fund? Or JLMIC? Megan did not have any answers, but indicated the unions who did not sign the total compensation agreement would have to reach agreement at their individual bargaining tables. Rather than hold a ratification vote at JLMIC for this new medical agreement, the item was pulled from the agenda and never mentioned at JLMIC bargaining again.

TEA was offered an opportunity to sign on to this tentative agreement, if we did so within 30 days. We asked questions at the next bargaining session about the content of the MLA, but there was little information to share. We proposed a counter offer, which was rejected. We could not reach any clarity on exactly what was being offered and sometime later the County withdrew its offer. In December of 2016 the County asked TEA to sign the Total Compensation version of the medical agreement, without the compensation the other unions were given for doing so, which we rejected. On January 1, 2017 the County implemented its plan and TEA subsequently filed a grievance over the improper bargaining of the benefits and an unfair labor practice (ULP) over the withdrawal of the offer.