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BOP keeps eye on federal health care reform developments

Many internal, external factors weighing on benefits plans

November 16, 2011

SAN DIEGO, Calif.

A changing church. A volatile economic climate. An aging population of plan members. A shrinking dues base. Rapidly increasing medical care costs. The upcoming 2012 and court challenges to federal health care reform that will surely reach the U.S. Supreme Court.

These factors and more fueled the deliberations of the Presbyterian Church (U.S.A.)’s Board of Pensions (BOP) at its fall meeting here Oct. 27-29.

As it awaits the fallout from the external forces it can do little to control, the Board heard reports and made adjustments to those circumstances it can control.

In addition to Medical Plan dues increases of 0.75 percent in each of the next two years ― the first dues increases in five years ― the board raised rates on a few programs that otherwise would have fallen into deficit positions by 2013. Among them (all go into effect Jan. 1, 2012):

  • A 7 percent increase in Medical Continuation dues;
  • A 7 percent increase in subscription rates for Medical Continuation subscribers who are covered by the Affiliated Benefits Program (ABP) and are not yet eligible for Medicare (early retirees).
  • A $10 per month increase in Medicare Supplement dues.

Stewart Beltz, the board’s director of health and welfare, told the board’s Healthcare Committee that “without our qualifying for the federal government’s Retiree Drug Subsidy, we would have had to raise rates $25 per month.

The BOP is paying particularly close attention to the creation of state health insurance exchanges ― a central feature of healthcare reform that are currently slated to take effect Jan. 1, 2014. The exchanges are  meant to offer individuals and small groups the opportunity to purchase coverage comparable to an employer group-sponsored health plan, such as the Medical Plan of the PC(USA).

The board’s actuaries have estimated that up to 70 percent of current plan members may be eligible for coverage under the exchanges.

“It’s too early to determine how or if the exchanges may affect the Medical Plan’s benefits, but the Board remains committed to the continuous review of its plans and relationships with its service providers to make sure the Benefits Plan offers value and affordability to its members,” said Pat Haines, senior vice president for benefits, on the BOP Web site following the meeting. Evaluating the exchanges “will be an extension of that commitment,” she added.

The BOP seems to be weathering the volatile financial markets that have driven investment officials crazy since the global economic collapse of 2008. As of the end of September, the board’s balanced portfolio stood at $6.5  billion, said vice-president for finance and accounting Michael Fallon, noting that the portfolio had gained valuation during October.

The board’s Pension Plan is currently more than fully-funded at 105 percent of future liabilities. It reached a low of 98 percent at the height of the financial meltdown in 2008. “It will take years for the U.S. economy to recover with returns ranging from -10 to +10 (percent),” said Judith Freyer, the board’s senior vice-president for investments. “The Board of Pension is up to the challenges,” she said, “and there are opportunities out there.”

As it has in recent years, the board voted to give Christmas gifts of $250 per single person and $500 per married couple to all retired plan members receiving a housing and/or income supplement through the BOP’s Assistance Program. “This type of Christmas gift has been one of the most appreciated expressions of compassion that the Board of Pensions sends to these retirees and surviving spouses,” said the Rev. Laird Stuart, chair of the board’s Assistance Committee.

He also appealed to all Presbyterians to support the Christmas Joy Offering, half of which supports the Assistance Program and half of which benefits the PC(USA)’s racial ethnic schools and colleges.

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