Health Benefits for Hospital Employees: A Cautionary Tale

Chelsea Rice, for HealthLeaders Media , April 8, 2013

If healthcare executives don't know where hospital employees stand on health benefits, how can they claim to have a strategy for truly promoting the health and well-being of employees?

A union action at a hospital in Olympia, WA, offers a case study in how employees might respond to the shifting market in health insurance coverage. As of January 1, healthcare benefits for 2,400 employees at Providence St. Peter Hospital (PSPH), a 390-bed hospital that is part of the five-state Providence Health System, shifted from a comprehensive preferred provider organization (PPO) health plan to a plan with three high-deductible options: a health reimbursement medical plan, a health savings medical plan, and a group health plan.

In protest to what they say were unfair labor practices and a reduction in healthcare benefit coverage, 530 of the hospital's workers (members of the Service Employees International Union) went on strike March 11. The group quickly grew to 700.

On the surface, the new insurance plans seem reasonable. The deductible is only $150 more than last year's plan, and out-of-pocket costs amount to $1,300 less than in the 2012 PPO plan, according to the hospital.

But the difference is not in the cost, it's in how these plans are used by the employees. Maximum out-of-pocket expenses now range from $5,100 to $6,600 for a family of four. These plans are not well suited for low wage earners.

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