Case: Health Care Bargaining and the PPACA

Case: Health Care Bargaining and the PPACA

GMFC is a multidivisional company with over 50,000 employees. Given its size, it has chosen to self-insure its Health care coverage and subtract administration to Vesuvious Health Care (VHC), one of the five largest Health insurance companies in the United States. In addition to paying claims, VHC is also the gatekeeper on what procedures are covered by the plan and negotiating payment levels with major Health care providers. Prior to the effective date of various PPACA provisions, the GMFC Health care plan had a lifetime benefit limit of $2 million per covered employee or dependent and offered coverage to dependents up through the age of 22 if enrolled in a full-time degree program. The PPACA has required GMFC to change its coverage to accommodate new benefit and age limit requirements, adding some cost to the company for the current plan Looking forward, GMFC wants to make sure that its coverage includes the essential Health benefits required by PPACA, but is concerned with the rate of Health care cost inflation. Local 384 is looking toward 2018 and is concerned that the company may abandon the plan because it might be vulnerable to the Cadillac tax. GMFC is considering dropping Health care coverage after the expiration of the current collective bargaining agreement and paying the federal penalties instead. This would leave employees in a situation where they would need to purchase insurance through an exchange. If GMFC were to do this, Local 384 would demand a large wage increase to offset the reduction in contributions from the company. In any event, there would be significant labor relations problems associated with a drastic change like this. Assuming that Health care insurance will be the most contentious issue in the upcoming negotiations, prepare either a union or a management position on future Health care benefits in GMFC, recognizing that the employer will be decreasingly able to compete if total compensation costs continue to increase and regulatory mandates become more cumbersome. Write a review of ideas to evaluate the issues and provide recommendations for improvement.


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