Welcome to the inaugural edition of 32BJ Health FUNDamentals by the 32BJ Health Fund.
About the Fund
The 32BJ Health Fund is an unusually effective collaboration between a labor union (SEIU 32BJ) and management (represented collectively by the Reality Advisory Board in New York) to provide affordable, comprehensive, and innovative health coverage to working-class people. The Fund aggregates employer contributions from 5,000 employers, ranging from many small businesses to global real estate firms, and uses these contributions to provide benefits to 200,000 people.
The 32BJ Health Fund serves members of the SEIU 32BJ union and their families. The union members are cleaners, property maintenance workers, doorpersons, security officers, window cleaners, building engineers, school and food service workers, and airport workers in 11 states and Washington, DC.
The 32BJ Health Fund’s approaches health coverage differently than traditional health plans:
- The Fund is able to create economies of scale: By aggregating benefits for union members across 5,000 mostly small employers, the Fund is able to offer benefits that are more cost-effective than the average benefit offered by most employers. Particularly for the many small employers who contribute to the plan, the benefits far exceed what they could buy in the market at the price they pay.
- The Fund has a long-term relationship with plan participants: In part because of their relationship with the union, union members stay in their jobs longer than the average worker and the Health Fund has low turnover amongst its plan participants. Union members can also change jobs within the industry without disruption in benefits. This means that the Health Fund is incentivized to think about keeping plan participants healthy for the long-term.
- The Fund has a unique relationship with its plan participants: Whereas most workers get their health benefits through their employers, members of SEIU 32BJ get their insurance through the Health Fund. Members know that the Health Fund’s purpose is to provide high-quality benefits and doesn’t seek to make a profit from the services it provides. Whereas employees may be hesitant to discuss personal health issues with their employers, the Fund’s plan participants frequently contact the Fund for recommendations about healthcare providers and trust the information that the Fund provides. 3
- The Funds invests in innovative communications strategies so that plan participants can get help with their benefits: The Health Fund works with 32BJ and contributing employers to communicate regularly with members through conventional mailings, social media, and on-site workplace meetings to make sure members understand the benefits they are entitled to. The Fund also runs its own on-site call center to answer questions about its benefits.
- Plan participants have a high degree of trust in the Fund: According to polls conducted by the Global Strategy Group in 2018 of Health Fund plan participants, 91 percent are satisfied with their coverage, and 88 percent trust the Health Fund to recommend programs to them.
Successful Cost Containment Strategies
In the face of rising healthcare prices, many employers shift more costs to employers each year. The management and union trustees of the 32BJ Health Fund have charged Fund staff to take a different approach focused on controlling total costs. Cost shifting can have unintended consequences—for example, deductibles can discourage use of appropriate care while encouraging overuse once the deductible is met. The 32BJ Health Fund designs its cost sharing to incentivize preferred behavior. For example, preferred providers have low or no co-pays. Drug co-pays are low for generic drugs and for people with chronic conditions who enroll in care management programs. As a result, plan participants have access to comprehensive coverage with no monthly premiums and can minimize costs by utilizing high-quality preferred providers.
The 32BJ Health Fund has developed several effective cost containment strategies that make it possible to maintain these generous benefits for the Fund’s plan participants. For example, the Health Fund used innovative plan design and provider contracting opportunities to lower its costs for some expensive procedures, like joint replacement surgery and bariatric surgery, saving $2 million in two years. The Fund has also created savings on prescription drug costs by requiring use of generic drugs when appropriate, having a closed formulary, and having a limited but accessible pharmacy network. As a result of these successful cost containment initiatives, the Fund’s employer contributions increased more slowly than medical inflation. Additionally, these initiatives ensure that members have access to care that is both affordable and high-quality.
The 32BJ Health Fund looks forward to telling you more about what it is doing and how it is adding value for members and contributing employers. If you would like to learn more about the 32BJ Health Fund and its work to keep healthcare affordable, please contact: HealthFund@32bjfunds.com
Like other healthcare purchasers, the 32BJ Health Fund is not immune to the forces causing healthcare costs to rise. What’s different is the way the Health Fund responds. While many payers choose to raise premiums, co-pays, deductibles, and other out of pocket expenses—and shift costs from employers to employees—the Health Fund does everything possible to avoid passing those costs onto members. The 32BJ Health Fund knows that all too often, high costs serve as a barrier to people getting necessary treatments. In an effort to control costs, the 32BJ Health Fund developed a robust data analytics team to analyze millions of rows of claims data the Health Fund receives from its vendors. By analyzing the Health Fund’s claims data, it found major variations in the prices it pays for standard high-volume procedures at New York City hospitals. For example, the Health Fund paid more than $80,000 for hip replacement surgery at one hospital, as opposed to a median price of $53,000 elsewhere. There were similar price disparities for having a baby, knee replacements, and many other kinds of in-patient and out-patient care. There was no evidence of quality differences to support the higher prices.
While the 32BJ Health Fund wants to find long-term strategies to lower the price of hospital care, it wanted to pursue an interim strategy of implementing a new network design. Based on its analysis, the Health Fund wanted members to pay more for planned care at the most expensive hospitals and pay less for such care at the other hospitals. However, the Health Fund was contractually prohibited from implementing this kind of cost-saving network.
The 32BJ Health Fund, working with both union and management representatives, participated in a campaign to call attention to the large disparities in the cost of care at different providers by drawing on its analysis of aggregate claims data. A campaign included advertising in local business papers, New York City Council hearings, as well as outreach to business leaders, local elected officials and journalists to call attention to the lack of transparency in the healthcare market. The campaign demonstrated the effects of hospital prices on working people and their employers and gave New Yorkers a window into the hidden world of hospital pricing. As a result, the 6 Health Fund was able to secure the changes necessary to implement a new network design and encourage members to use lower-cost providers.
For the first edition of 32BJ Health FUNDamentals, Sara Rothstein, 32BJ Health Fund’s director, reveals why she devotes her career to improving the health and healthcare of union members, where she thinks the biggest opportunities lie in making the biggest impact on healthcare costs, and much more.
32BJ Health FUNDamentals: What made you decide to work for union members at 32BJ?
Sara: The Trustees of the 32BJ Health Fund have made a commitment to the union members—health coverage will be high quality and low cost. It’s a challenge to deliver on that commitment, but that challenge is exciting to me. Many employers struggle to manage increasing healthcare costs and it’s unfortunate to see them merely shift costs to their employees without trying to make fundamental changes. We are trying to do something different, and I’m so excited and proud to lead this work. 7 The Trustees recognize the 32BJ Health Fund has to change with the times and have tasked me with getting ahead of the curve through innovation. We are developing all kinds of clinical programs—for example: increasing access to midwives, developing a program for gender affirmation surgery, identifying high-quality bariatric surgery programs and reducing drug co-pays to improve drug adherence—that are unusual in the world of health insurance, but critical to improving value and the quality of care.
32BJ Health FUNDamentals: Where do the biggest opportunities lie now and in the next few years for making the biggest positive impact on healthcare costs?
Sara: The good news is that our members are in markets with a lot of highquality healthcare. The challenge is that quality is available at different price points. When we look at our claims data, we see big differences in what we pay for care at different hospitals. To ensure that health coverage remains affordable for our members, we need to identify the cost-effective, highquality providers and encourage our members to use them.
32BJ Health FUNDamentals: How does your team get feedback from members? How do their views and preferences inform their coverage and care?
Sara: First, and this distinguishes us from most health plans, we run our own call center. Instead of members calling vendors for their benefits, they call us directly. This means we have a team that does nothing but answer questions about 32BJ health benefits, so they know the benefits really well. It also means that our members can get the direct number and name of someone who can help them with their benefit questions. Members can also walk into our welcome center to get their questions answered. These communications channels mean that we track and respond to members’ concerns in real time.
32BJ Health FUNDamentals: What do you hope to achieve by identifying high-quality care providers?
Sara: We want to give our members confidence that they are going to get high-quality care. From the 32BJ Health Fund’s perspective, we need to align cost and quality so we can continue providing for our members over the longterm. If the same colonoscopy, for example, can cost $1,200 or $8,000, it’s in everyone’s interest for our members to pay $0 for the $1,200 procedure, rather than have the member and Health Fund both pay more for the $8,000 procedure.