I'm always skeptical when companies make broad statements without citing dollar amounts or other hard numbers to back them up. That's why Corporate's communications around the new employee health insurance plan have raised big red flags.
I'm talking about how much the company is blaming the Affordable Care Act of 2010 -- Obamacare -- for the 2014 plan and its sharply higher costs for current employees and for retirees. Corporate's blame game comes off as a cynical ploy to divert anger toward one of Washington's biggest political piñatas. And Gannett's not the only company doing this.
Let me explain.
Obamacare was the very first sentence in CEO Gracia Martore's letter to employees Monday announcing the change. "The implementation of Health Care Reform," she wrote, "will bring significant changes to the health care industry and to health insurance plans."
Then yesterday, in an FAQ to employees, Corporate included a section on Page 3 under the question, "Why is Gannett changing the health care plan?"
Two of the three reasons were about spiraling medical spending by employers and employees. There's been a 114% increase nationwide over the past decade, and for Gannett especially, costs have been rising ahead of the inflation rate, the document says. Fine.
How much?
But the first answer listed was also the longest: Obamacare. Corporate says, "employers who offer insurance are required to pay fees to help make the public exchange premiums affordable to those needing to use the exchanges."
Really? How much are those fees? What's the average cost per Gannett employee annually during the early years of Obamacare? I guarantee you Corporate and its highly-paid consultant (Mercer, I believe) have a very good estimate of that cost.
Indeed, Gannett's own medical administrator, UnitedHealthcare, offers an overview of some of the fees to be paid by self-funded employers like Gannett. One of the biggest is the reinsurance fee, which costs companies about $63 per employee per year in 2014. So far, however, it looks like Gannett is boosting employee medical premiums alone by amounts far in excess of $63 a year.
But that's not all. Next, Corporate writes: "Many employers are seeing their health care plan costs increase as a result of Health Care Reform." How many employers? What percentage of all? Even a ballpark estimate would be better than the loosey-goosey "many."
Corporate's blame-Obamacare message ends with this: "Employers view consumer-driven health care plans as a key component to managing costs related to the changes driven by Health Care Reform."
Here, then, is how Gannett arrived at the radical change in 2014's medical benefit. By adopting a single plan based on high deductibles and health spending accounts, Corporate is putting employees in charge of managing their health spending.
In the driver's seat
It's similar to what happened 30 years ago when Gannett and other employers started offering 401(k) accounts that have effectively replaced traditional pension plans. Today's employees are now expected to do their own retirement planning, including how they invest.
I don't have a problem with that philosophy: putting employees in the driver's seat. Gannett sells news, information and advertising. It shouldn't be forced to also be a health care provider. But this is the system we've got.
I'm sympathetic to any employer's frustration with government regulations. Briefly during my 20s, I started and ran a small graphic design business with a part-time employee and a medical plan for the two of us. I was angered by all the paperwork requirements to meet local, state and federal workplace regulations -- and that that was in the early 1980s. I'm sure it's worse today.
But facts are facts. Gannett expects its purported 5,000 journalists to question local employers closely whenever they ratchet up consumer costs. Watchdog journalism isn't limited to public governance -- it also extends to corporations, too.
In principally blaming Obamacare for the new insurance plan, Corporate owes 31,000 employees and thousands of retirees more information than they've received so far.
Related: White House details premium costs of health plan in 36 states. Plus: Sen. Cruz's defiant stand is also a lonely one. And: a basic primer on how Obamacare will work.
Obamacare was the very first sentence in CEO Gracia Martore's letter to employees Monday announcing the change. "The implementation of Health Care Reform," she wrote, "will bring significant changes to the health care industry and to health insurance plans."
Then yesterday, in an FAQ to employees, Corporate included a section on Page 3 under the question, "Why is Gannett changing the health care plan?"
Two of the three reasons were about spiraling medical spending by employers and employees. There's been a 114% increase nationwide over the past decade, and for Gannett especially, costs have been rising ahead of the inflation rate, the document says. Fine.
How much?
But the first answer listed was also the longest: Obamacare. Corporate says, "employers who offer insurance are required to pay fees to help make the public exchange premiums affordable to those needing to use the exchanges."
Really? How much are those fees? What's the average cost per Gannett employee annually during the early years of Obamacare? I guarantee you Corporate and its highly-paid consultant (Mercer, I believe) have a very good estimate of that cost.
Indeed, Gannett's own medical administrator, UnitedHealthcare, offers an overview of some of the fees to be paid by self-funded employers like Gannett. One of the biggest is the reinsurance fee, which costs companies about $63 per employee per year in 2014. So far, however, it looks like Gannett is boosting employee medical premiums alone by amounts far in excess of $63 a year.
But that's not all. Next, Corporate writes: "Many employers are seeing their health care plan costs increase as a result of Health Care Reform." How many employers? What percentage of all? Even a ballpark estimate would be better than the loosey-goosey "many."
Corporate's blame-Obamacare message ends with this: "Employers view consumer-driven health care plans as a key component to managing costs related to the changes driven by Health Care Reform."
Here, then, is how Gannett arrived at the radical change in 2014's medical benefit. By adopting a single plan based on high deductibles and health spending accounts, Corporate is putting employees in charge of managing their health spending.
In the driver's seat
It's similar to what happened 30 years ago when Gannett and other employers started offering 401(k) accounts that have effectively replaced traditional pension plans. Today's employees are now expected to do their own retirement planning, including how they invest.
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| Martore vs. Obama |
I'm sympathetic to any employer's frustration with government regulations. Briefly during my 20s, I started and ran a small graphic design business with a part-time employee and a medical plan for the two of us. I was angered by all the paperwork requirements to meet local, state and federal workplace regulations -- and that that was in the early 1980s. I'm sure it's worse today.
But facts are facts. Gannett expects its purported 5,000 journalists to question local employers closely whenever they ratchet up consumer costs. Watchdog journalism isn't limited to public governance -- it also extends to corporations, too.
In principally blaming Obamacare for the new insurance plan, Corporate owes 31,000 employees and thousands of retirees more information than they've received so far.
Related: White House details premium costs of health plan in 36 states. Plus: Sen. Cruz's defiant stand is also a lonely one. And: a basic primer on how Obamacare will work.
As a general rule, I discourage purely partisan political debates on this blog. But I make exceptions when the subject is focused on Gannett and the news industry.
ReplyDeleteIn this case, I'm looking for comments that discuss the subject of this post: Has Corporate proven its case that Obamacare is principally to blame for the new medical plan?
I don't want a divisive debate on the merits of Obamacare itself.
You don’t want the real answer Jim, just more validation for a plan you and yours want enacted regardless of its cost to employers and advertisers who support Gannett.
DeleteBottom line is this: Gannett did share enough and it aligns with what other companies large and small are doing to get ready for what a majority think will be damaging. Hence, use the journalism skills you once had to dig into it as the answer you seem to avoid is there if you dare.
This comment has been removed by a blog administrator.
ReplyDelete6:38 didn't seem to read my advisory. To repeat:
DeleteI'm looking for comments that discuss the subject of this post: Has Corporate proven its case that Obamacare is principally to blame for the new medical plan?
Under those terms this is an utterly pointless thread. See ya.
Delete7:15
DeleteNO PLEASE, DON'T GO. REALLY.
They may not have published spreadsheets spelling out exactly how Obamacare incents and coerces an employer to dump people onto the government-run exchanges and Medicaid, but they don't have to — it is, after all, the law of the land, there for all the world to see (those who will).
ReplyDeleteIf the costs are real and truly onerous, the company can make its case by posting the facts. Without them, it's just bluster.
Delete@8:05 AM: Rubbish. It's not someone else's responsibility to educate you about laws passed in your name. It's your duty as a citizen.
DeleteI'm not asking Corporate to educate us about the law. I'm asking that it detail the law's role, in dollars and cents, in the new plan and cost increase. This is journalism: making powerful interests accountable.
DeleteMalarkey. Gannett is hardly a "powerful interest" — it's a pawn. The powerful interests that need to be held to account are the politicians who are staging a naked power grab over a huge chunk of the economy that touches every man, woman, and child.
DeleteWith nearly 31,000 employees, Gannett is one of the nation's biggest private employers. More to my point, it's the largest newspaper publisher by revenue, and with the Belo deal it will be one of the biggest TV owner-operators.
DeleteThere's no doubt that politicians hold a lot of power, too -- but only what their corporate financial backers allow.
In any case, mine is a business blog, not one purely about government politics. That's why I'm focusing on a more complete truth about what's really driving Gannett's medical costs higher.
Corporate's hands aren't completely tied. It made choices based on reams of facts, almost none of which it has shared with its employees and shareholders.
One suspects you can't handle the facts in regard to this Jim.
DeleteRegardless, try this for one: Every Gannett part-time employee who averages more than 30 hours per week will be eligible for health care via Gannett as a result of Obama Care. So, employees who once cost Gannett zero to insure will now likely cost it millions more annually.
Of course, some may scoff at that but break those costs out to individual papers and those costs have to come from somewhere, try cutting jobs and hours for but one way to pay for it.
Plus, advertisers will be facing the same higher costs…care to guess where they will seek some savings? Hint: cut advertising expenditures, that is unless you think companies like Walgreens, Home Depot and others will just limit thier cost savings measures to booting their own employees of their plans.
Word for word, here's what Corporate said about Obamacare's role in the new medical plan:
Delete"Under the Health Care Reform laws of the Affordable Care Act, everyone can get coverage through new public exchanges (starting from October 1, 2013), even those previously excluded due to high-risk health issues or pre-existing conditions. Employers who offer insurance are required to pay fees to help make the public exchange premiums affordable to those needing to use the exchanges. Many employers are seeing their healthcare plan costs increase as a result of Health Care Reform. Employers view consumer-driven healthcare plans as a key component to managing costs related to the changes driven by Health Care Reform."
I don't see anything in there about Gannett's costs moving higher because it must start covering part-time employees. That would be the sort of details that are missing, and which I wrote about in this post.
In any case, assuming covering part-timers is a meaningful expense, we don't know how meaningful. That's because Gannett discloses employment figures only once a year and it doesn't break down the number of full-time vs. part-time employees.
In the latest annual report, it says only this: "At the end of 2012, the company and its subsidiaries had approximately 30,700 full-time and part-time employees including 2,200 for CareerBuilder."
plus part-timers no longer get 30 hrs. a week
DeleteTaking 6:38's post down means you are looking for a yes or no to a silly question. I read the post. It seemed rational to me. If you won't allow real debate here then let me save everyone a lot of time: "No, and Gannett sucks!" Ok next string. Happy Jim? So much for real dialogue. Let's get back to the bashing
ReplyDelete"Corporate's blame game comes off as a cynical ploy to divert anger toward one of Washington's biggest political piñatas"
ReplyDeleteJim’s comment demonstrates once again that he has one helluva blind spot when it comes to this issue as the fact is this bill is creating huge problems for not only Gannett, but those who support it via their dollars too.
It's a fact, Jim obviously doesn't want to admit because he whines about his own personal costs. Costs, that aren’t surprising considering he CHOOSES TO LIVE in one of the most expensive cities in this nation.
My health care premium costs will go up $2300 per year, and for that I am getting worse coverage. Whether or not Gannett is gaming the system because of Obamacare or not, they are reaching into my pocket and giving me a gigantic pay cut. It's not enough that I am doing a ton more work on a daily basis since the most recent layoffs, now I'm getting screwed financially too.
ReplyDeleteJim, you finally have a real issue to talk about and all you want to do is point a negative finger at Gannett. This is a real problem. Wake up for heavens sake. This is going to be a fiasco when people see how bad the exchange coverage is and how much IT actually costs. Check the web and see how many huge companies have decided to dump their coverage all together. At least Gannett is still providing coverage. Try being a reporter again. Educate your readers. This is a game changer man.
ReplyDeleteWell, they should be paying into the system. If I was still working there at close to my 2008 salary, I'd be eligible for Obamacare. ($45,000 a year, family with one kid, $6,900 a year in premiums, which is more than 9.5% of salary)
ReplyDeleteThankfully, my current company's similar plan charges one-fifth the premiums and contributes 18 times more to the HSA.
Since it's doubtful that Ms. Martore would ever let us ask her questions like the ones Jim has put out there, it would not be a bad idea to ask your publisher or HR head those questions. See what specific answers he or she comes up with. If they don't provide answers, then you start "chasing the squirrel up the tree" to get the answers.
ReplyDeleteI think that would make you a journalist.
The $63 fee is per covered life, so if you are covering a family of 4 the fee is per$63 × 4.
ReplyDeleteUnitedHealthcare's fact sheet says: "per member/per month."
DeleteAssuming then that each family dependent is a "member," in your example Gannett would pay $252 more per year.
But aren't the new family premiums much higher than just $252 a year?
pressman for gannett my wife works for UHC. she stats the plan Gannett offers employees is the rock bottom plan for any size business company offers. So all healthcare regardless of Obamacare or Gannett No-Care can be better if everyone wanted. With all Corporate take-away these years one would think they could give employees something in return. But like usual, i'm wrong again.
DeleteRegardless of this particular issue, why does any employer have any obligation to disclose precisely how it arrived at its benefits package? Obviously the company made what it believed (correctly or not) to be a rational business decision regarding total employee compensation in 2014, with the full understanding and expectation that any employee who can do better elsewhere will leave. Duh. You can second-guess the decision all you want, but unless and until they put you in charge, what exactly does that accomplish?
ReplyDeleteGannett isn't just any company. Ostensibly, it's an enterprise dedicated to ferreting out the truth for the benefit of its shareholders, customers and the communities the company serves.
DeleteThat means the company has a special obligation to be more transparent in its operations than just any ordinary widget maker.
Let me quote from what Gannett calls "our purpose," which is published on Corporate's website.
The company's mission: "We are on a relentless quest to provide trusted news and information and to actively support the people and businesses in the communities we serve."
Under "our values," there are these:
* Do the right thing.
* Have courage. Do what must be done.
* Be accountable.
On its face, the new plan is a move to shift a greater share of healthcare costs to employees. I'd like to know for the previous two or three years how much Gannett took in for its self-insured pool; how much it spent on health care costs each of those years; how much the company projects it will receive in premiums for the coming 2-5 years and how much it projects will be spent on healthcare cost in the same period. Make the case why this is necessary. I'd ask these questions of any organization/local government I cover if that entity were making a similar change.
ReplyDelete"Make the case why this is necessary."
DeleteFirst of all, the rationale of giving employees more skin in the game as a means to help control demand and inflation was stated pretty straightforwardly. Any journalist should be familiar with the concept since it's been debated for years.
More importantly, though, a company does not need to justify its benefits to anyone but its shareholders. Unless an employee is in a position to negotiate benefits (either individually or collectively), he can take it or leave it.
9:40 here. I AM a shareholder. I have a 401k, most of it invested in Gannett stock, so based on your assertion my interest in Gannett making its case is as legitimate as any large investor/shareholder. As far as controlling demand for healthcare and inflation, I believe this type of change won't affect that. Demand will continue, and if people can't afford preventive and routine chronic condition maintenance care, demand for more expensive, acute-care services will increase. That's been demonstrated among the uninsured. Inflation is driven by numerous factors, not just employee consumption of health care.
DeleteYou have most of your 401(k) in Gannett stock?!? My god that is risky.
DeleteI'm sure you've seen a nice rise so far this year but keep a careful eye on once Q3 earnings are released ... ad revenue declines are a given, all the subscription price increases will be fully cycled through, and the digital subscription numbers will be shockingly low vs the big goals Gracia promised to analysts at the start of the year.
Gannett would be doing most of its employee's a favor by NOT offering insurance...At least it would be doing my family a favor...Yes, my coverage is affordable, but the family coverage as it stands now is not affordable for us...But because my coverage is considered affordable, my family can't access the exchanges or subsidies which they'd be entitled to purchase their own coverage...Considering divorce to get around this...Seriously.
ReplyDeleteI have to restate...They can access the exchanges, but would receive no tax subsidies because of my individual "affordable" coverage...Without subsidies it appears the cost to insure them would be similar to what the family premium would be via Gannett...With one caveat though...It looks as though their coverage would be more comprehensive than what Gannett is offering...Regardless it's still too expensive on a family income of $36K.
DeleteOn the face, Gannett is going out of business. Period. They are winding down operations in the most lucrative way possible. That appears to be the story here. Most of you could probably get better jobs elsewhere.
ReplyDeleteThis comment has been removed by a blog administrator.
DeleteMcClatchy to shut down retirees health plan
ReplyDeletehttp://www.bloomberg.com/news/2013-09-24/mcclatchy-to-shut-down-retirees-health-care-plan-by-end-of-2014.html
Gotta love that media objectivity, like the Bloomberg report linked by Jim, the one that starts out calling the Affordable Care Act a "scapegoat." Journalists who helped make this "free lunch" happen will get their just desserts.
ReplyDeleteFor once, I am against most of the Jim-bashing. Normally he deserves every bit of it.
ReplyDeleteHere, though, he has committed only one error directly related to his intent. He wants people to bash Gannett. Gannett is not to blame for this problem.
His other errors are related to issues largely out of his control. The big one is the inability of most here to understand how this system works. Health-care costs were spiraling out of control long before Obamacare was put into place.
Clearly there are some big flaws in Obamacare. Those are made worse by politicians treating the issue as an all-for-nothing football.
I'm sure Jim will find some way to rule out this post. But it's close to impossible to answer the question the way he has presented it. Not everyone has the same health-care needs. There's also a new problem just revealed with the exchanges. Somehow Congress was "too busy" to notice this until now.
What? My original post asked four questions, all of which Corporate could answer in one fashion or another.
DeleteCorporate says it must pay fees to help make the public exchange premiums affordable. I asked:
How much are those fees? What's the average cost per Gannett employee annually during the early years of Obamacare?
Corporate says many employers are seeing their health care plan costs increase as a result of Health Care Reform. I asked:
How many employers? What percentage of all?
Now, 11:53, why is it close to impossible to answer those questions?
Jim, the last two questions are based on a faulty premise -- that health-care reform is causing plan costs to increase. Those costs were increasing for decades before Obamacare.
DeleteEven if those questions were valid, how in the world is Gannett supposed to answer the question of how many other employers are seeing that increase? Even a think tank would have difficulty measuring that. Hence, close to impossible for Gannett.
Your point seems to be "Where is the 'many' adjective coming from?" You probably have something there, although I don't think it's such a bold assumption on Gannett's part, except for the faulty cause, of course.
To your first two questions: I think the problem is measuring how many people are going to the exchanges. Given that just this week, there was a disclosure about a problem related to that, and one that is not Gannett's fault unless you think USA Today should have uncovered it sooner, it is fair to say few companies know how many people are going to the exchanges. Some might choose to have no insurance and eat the fine.
As always, you try to press for a simple answer where there is no simple answer. Your insistence that there should be one shows your inability to comprehend, or to reason, or to use logic. But we already knew about all of that.
Just the opposite: Corporate tried a simple answer -- blame it in Obamcare -- and I asked for one more complicated, because it required lots of detail.
DeleteCorporate made financial assumptions about costs under ACA. No doubt they'll have to be adjusted as reality sets in.
But it shared none of those details, saying instead, trust us: It's gonna cost big and it's Washington's fault.
I'm just doing what any editor would demand: asking follow-up questions. I'm disappointed people here seem to think that's misguided.
No, you're asking simplistic questions that aren't even the right questions.
DeleteOutside of USA Today and other newspapers writing about the issue, what do you think Gannett should have done? Commissioned a team to research all those details you think the company should offer?
6:01 PM
DeleteUm... Isn't their job to research those details? Particularly if it's ostensibly informing their decisions on our healthcare plans?
Or are you cool with them just saying, "Damn if I know what Obamacare will cost Gannett, let's just hose the employees"?
Details on every other company in the nation? That's what Jim is asking for.
DeleteI knew it would be only a matter of time, though, before a member of Jim's simple thinkers came in, read nothing, made a hasty conclusion, and then tried to make a point based on ignorance. Bravo.
6:01 It wouldn't have to be any more complicated than something like this:
Delete"Employers who offer insurance are required to pay fees to help make the public exchange premiums affordable to those needing to use the exchanges. For Gannett, these fees are increasing our annual medical costs by $11 million, or an average of about $355 per employee."
I've picked that $11 million figure purely as an illustration; I don't know the real cost.
But Corporate does. Otherwise, how would it and Mercer have known how to design this new medical plan and its costs?
According to a Gannett corporate webinar I attended on the health care plan changes, they said the average fee for employee was $63 to help make the public exchange premiums affordable to those needing to use the exchanges.
Delete10:49 My point exactly -- and that's the annual fee. If the cost is $63 per employee (or even if it's $63 per employee and each family member covered), then why are the plans this year so much more expensive?
DeleteWhat I'm hearing from employees is that their 2014 premiums are going to be considerably higher than $63. That leads to my speculation Corporate is using Obamacare as an excuse to recover millions of dollars in employee medical expenses that it's wanted to unload for years now.
And I don't blame the company. As I wrote in my original post, there's no reason why a company selling news and advertising should be in the medical insurance business. But that's how the nation's sorry health care system works.
For that reason, if Corporate wants to shift more of the cost to employees -- fine. But it needs to be honest about that, instead of deceptively pointing the finger at Washington.
At every Gannett paper I worked for in the '80s, '90s and '00s, 30-hr-week part-timers were eligible for insurance. That's why we had many 24-hour-week workers. Has that policy changed since 2003?
ReplyDeleteAt every Gannett paper I worked for in the '80s, '90s and '00s, 30-hr-week part-timers were eligible for insurance. That's why we had many 24-hour-week workers. Has that policy changed since 2003?
ReplyDeleteYep. That's why they only allow PTs to average only 29 hrs per week. You hit 30 hrs and you're eligible for benefits.
ReplyDeleteJim, I'm getting all sorts of error messages related to your site lacking a security certificate. They don't come up for anything else, and the virus protection is current.
ReplyDeleteI'm sorry to hear that. You are the first reader to mention that. Is anyone else having this problem?
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ReplyDeleteThis comment has been removed by a blog administrator.
DeleteDear Gracia,
ReplyDeleteMy life just changed. Our family makes around 90,000 a year. We have no choice for healthcare but Gannett benefits. I found out that starting January 1, 2014, we will be taking around a 15% cut in order to cover our possible health issues. I don't go to the doctor often, neither do my child or spouse. Today, I've learned that Gannett doesn't care about me; that hurts, but only a little. I never really thought Gannett cared, but had a little hope. All hope is gone.
My family has taken a 15% paycut today. I understand that for you 15% is somewhere around $145,000, but the thing is that we don't make that in a year, before paying for insurance, cars to get us to work, jets to scoot us around the company, or our gym membership to try to keep us healthy so our healthcare costs remain low.
I'm disappointed, saddened, and have lost all faith in the idea that you care even a little about any of us.
Sincerely, devoted worthwhile employee looking for work now.
You will be glad when you get out. Change is scary but once you get past being scared and become determined to find something better for yourself, it will happen. Think about the skills you have and start thinking about using them in a business other than newspapers. Most companies have the same setup, just a different product. Best of luck!
DeleteJim, you've put your finger precisely on the issue -- Gannett, like some other bottom-dwelling companies, is using the new health care law as an excuse to do what they its leaders want to do, which is slash spending on labor.
ReplyDeleteThe squeals, protests, political evasions and blathering here from the C-Suite posters are proof that once again you've touched a GCI nerve. Big time.
It is so obvious when Jim hits that Gannett nerve and rather entertaining.
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Delete6:49 Name-calling ("simple thinker") is unnecessary. That's why I removed your comment.
DeleteHave it your way, Jim. But there are a lot of people here, including you, who can't handle this type of thread. They only want to blame corporate, and apparently they can't comprehend any post that does anything other than that.
DeleteI'd say the previous categorization of those people is true. It holds for you, too.
My only wish was for the company to eliminate Heath care in it's entirerty. Simple as that.
ReplyDeleteWonder how losing significant health benefits will go over with the young highly paid programmers at Tysons and the USAT Sports whiz bangs, not to mention the young poorly paid kids they are recruiting for the websites.
ReplyDeleteWhat significant benefits are being eliminated?
DeleteAll benefits when only working 29 hrs. a week
DeleteJim, I'm puzzled why you would ask such a question. Based on reporting here and elsewhere, the company is ending its PPO health coverage. That is a significant loss of benefits by any analysis. Instead, workers will be responsible for first dollar payments on care. Workers will face higher premiums and receive less coverage. Workers will be obligated to pay more for health care.
ReplyDeleteWith your help, I'm learning more.
DeleteNo prescription drug coverage. That's a lost benefit.
ReplyDelete