(Unexercised) Bargaining Power and the Runaway Train on Retiree Healthcare

Bargaining power

When most U.S. employers go out to buy health insurance, they pretty much have to take what is offered from a handful of powerful major carriers. UC, however, is so large that carriers bid for its business. It has bargaining power. Yet, as we have pointed out in past posts, it seems willing to go into the unknown in the quest to privatize its offerings of retiree health care rather than exercise its bargaining power to provide assurances to plan participants.

UCOP seems willing to accept the idea that $40 million will be saved by switching to a privatized system with no appreciable degradation of the offerings. Somehow, more for less - or, at least, the same for less - is supposedly being offered. When asked how such magic is possible, UCOP representatives say that maybe the carriers will get the extra money from Medicare and pass it along to UC. But, they say, since the system is privatized, UCOP cannot really know where the cost cut comes from. Nonsense! Ask! And say there will be no deal if a credible explanation is not offered, one that can be shared with participants.

The privatized Medicare Advantage system shifts the determination of what is "medically necessary" from Medicare to the private carriers. So UCOP should insist on a provision in the contract that says that no service which Medicare would approve will be denied. And it should set up a mechanism for complaints and enforcement if there is a deviation from that provision. What should not be said by UCOP is:

"High-quality evidence does not currently exist concerning how, if at all, medical necessity decisions differ between traditional Medicare and MA PPOs."

Source: https://files.constantcontact.com/0c822253501/fc0386ad-a1c7-4d7c-a6ee-0523240d4cec.pdf

But, of course, that statement above is - so far - the official UCOP response to the issue.

It isn't the little frills, plus or minus, that participants are worried about. What they want is to avoid horror stories, such as appear from time to time in the news media about reimbursements being denied because, say, someone sent to an emergency room in an ambulance didn't call for a second opinion. UCOP needs to use its bargaining power to avoid horror stories.

To this point, there is little to indicate that UCOP is engaged in true bargaining from strength. And the timetable for the runaway train - i.e., implementation by January 1, 2020 - suggests there is little time left to do so.
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*Past postings on this subject:

https://uclafacultyassociation.blogspot.com/2019/06/silo-thinking-and-runaway-train-on.html

http://uclafacultyassociation.blogspot.com/2019/06/yet-more-on-retiree-healthcare-runaway.html

http://uclafacultyassociation.blogspot.com/2019/06/footnote-on-runaway-retiree-healthcare.html

http://uclafacultyassociation.blogspot.com/2019/06/timetable-of-runaway-train-on-retiree.html [Includes previous links.]