Last week, an arbitration panel issued the terms of a new contract between the City of Philadelphia and the Fraternal Order of Police. The one-year award governs wages, benefits, and working conditions for more than 6,000 employees. The deal also included the creation of a joint committee between labor and management to examine how to control healthcare costs. There are a number factors, both internal and external, that could possibly impact the price of health insurance in Philadelphia over the next year.
Currently, each municipal union is responsible for administering healthcare plans for their members. The city pays a fixed amount of money per employee each month to the unions. The award for police lowered the amount from $1,303 per employee to $1,165 per employee. Overall, that means a decrease from $100.7 million to $95.4 million. This portion of the contract was historic, since it's the first time in more than ten years that healthcare payments have actually decreased. The award was particularly surprising because healthcare costs have been rising over all.
So, what might impact healthcare costs? Well, according to a story in Friday's Daily News, the joint committee on costs might be the first step towards the consolidation of union health plans. Currently, each of the four municipal unions is responsible for administering their own plan. A fifth plan covers exempt employees, like department heads or political appointees. Nutter reportedly wants to put all the employees into a single plan to save money. If it actually happened, it would be a major change in how healthcare works for municipal employees.
Changes are also happening at the state level that might impact healthcare costs. First, there is the potential merger between Independence Blue Cross and Highmark Inc. This gigantic company would dominate about 50% of the Pennsylvania health insurance market. It's not clear if costs would go up or down, but the merger is sure to impact the price of healthcare.
Another factor is the healthcare proposal being pushed by Gov. Rendell. His plan, called Prescription for Pennsylvania, would expand coverage for the uninsured. It might drive healthcare costs down through increased efficiencies in hospitals and other caregivers. If the proposal passes, it could drive down health costs for municipal employees.
Finally, a solution to the high cost of healthcare might come at the national level. If Barack Obama is elected president, it is safe to assume that he will try to do something about the millions of uninsured in the United States. The solution is going to be big and complicated, but a byproduct might be the lowering of healthcare costs in Philadelphia. That means potential savings in the next police contract, which will be up for negotiation in a year.