You are using an older browser version. Please use a supported version for the best MSN experience.

WGA Health Care Fix A Key To Successful Contract Talks

Deadline logo Deadline 3/13/2017 David Robb
© Provided by Deadline

As negotiations begin today for a new WGA film and TV contract, expect big changes ahead for the WGA’s ailing Health Plan, which faces insolvency in three years at the current rates of income and expenditures.

To save the plan, which has run deficits in all but one of the past four years, negotiators will either have to agree to increase employer contributions, cut benefits, or raise the amount of money writers must earn to qualify – or some combination of all three. Failing to find an acceptable solution could be the flashpoint of a strike when the current contract expires May 1.

Cuts in benefits will be a hard pill for writers to swallow, but that is almost certainly something the companies are looking at. Slashing the level of benefits across the board is one possible fix, but that would almost certainly trigger a strike. A less painful way to cut costs might be to adopt a two-tier benefits plan, with higher earners receiving a broader range of benefits and lower deductibles than lower earners.

Of the health plans offered by the industry’s three guilds, the WGA’s is the only one without two tiers. Currently, the DGA’s lower-tier health plan – called the DGA Choice Plan – kicks in for members who earn as little as $34,100, while the DGA’s Premier Choice Plan kicks in when members earn $106,000 a year, which is nearly three-times the earnings writers need to qualify for the WGA plan.

Even so, DGA members can qualify for the lower-tier program – which is identical to the higher-tier plan as long as participants stay with network providers – while earning $4,000 a year less for coverage than writers under the WGA plan.

SAG-AFTRA also has a two-tier health plan. Under Plan 1, the union’s premium plan, performers must earn $33,000 a year for coverage, which is $5,000 a year less than writers must earn to receive coverage under the WGA plan. Under SAG-AFTRA’s Plan 2, which requires higher co-pays and deductibles, performers can get health coverage after earning only $17,000 a year – or less than half of what writers must earn.

The easiest fix, at last for writers, would be to increase the employer contribution rate, as has been done many times over the last 20 years. Currently set at 9.5% of covered earnings, the employer contribution rate has more than doubled since 1997, when it was just 4%.

And while that 9.5% rate is 30% higher than the 7.31% that employers contribute to the SAG-AFTRA Health Plan, it’s nearly 10% lower than the 10.5% that employers contribute to the DGA Health Plan. And the DGA only got that high after making wage-increase concessions – something the WGA seems to be in no mood for.

WGA West members earn more than $1 billion a year under the guild’s film and TV contract, so even increasing employer contributions to levels commensurate to the 10.5% that employers pay into the DGA plan would only increase funding by about $10 million a year – which may not be enough, by itself, to rescue the WGA plan.

WGA members currently qualify for full health coverage – which includes medical, hospital, dental, prescription, vision, wellness and life insurance benefits for participants and their eligible dependents – by earning just $38,302 a year. And therein lies one of the problems, because such comprehensive health benefits are afforded to few workers in any other industry in the country who make only $38,000 a year.

Twenty years ago, the minimum earnings to qualify for full WGA health coverage was only $11,596 – less than a third of what it is now. That rose dramatically in 2003 – to $28,883 – when minimum earnings switched from being based on the minimum pay for a half-hour primetime story and teleplay to the minimum pay for a one-hour primetime story and teleplay.

Those eligibility minimums will certainly go up this year because they’re based on earnings minimums, and when the guild negotiates an increase in the earnings minimums, the health care eligibility minimum goes up by the same amount automatically. Usually, that’s about 2.5%-3% in each year of a three-year contract. But that’s less than half the nation’s 6.5% annual increase in medical costs, which are only expected to rise in the coming years. So raising eligibility minimums by just 3% a year will only get the WGA’s Health Plan deeper in the hole.

So except for a major boost in employer contributions, or draconian cuts in benefits, a two-tier health plan may prove the least painful way forward. But one thing is clear: major changes are coming, or the industry could be facing its first strike over health benefits.

AdChoices
AdChoices

More from Deadline

AdChoices
image beaconimage beaconimage beacon