The True Impact of the Governor’s Offer
State law does not allow UHPA or any bargaining unit to negotiate health plan benefits or health plan offerings. The plan benefits and offerings are determined by the Hawaii Employer-Union Health Benefits Trust Fund (EUTF), which includes 5 representatives from the employer, and 5 representatives from labor, one of which represents the retirees. UHPA and all bargaining units can only negotiate the amount of health care premiums paid by the employer.
The Governor’s opening offer of a 0% salary increase for the first year, a 0% increase for the second year, and an EUTF flat rate that will not increase with increasing healthcare costs has dire implications for our faculty members. The Governor’s representative was unable to answer any questions regarding the impact of the proposal.
The employer currently pays 60% of the health care premiums costs for the plan offerings under the EUTF, you pay 40% of the health care premiums. The Governor’s offer is changing from a percentage to a fixed dollar amount at the level it is today, which means that any health care increase will pass directly on to you.
The economy remains strong, but with Inflation/CPI projections of up to 3% in 2017, this offer will have a negative impact on your purchasing power. Healthcare inflationary trends, although lower than in the past, are still slightly above 5%, with prescription drug costs running closer to 10%. The projected CPI with rising healthcare costs, combined with no increase for your EUTF healthcare premiums, compound the impact of no pay increase.
To illustrate the impact of the Governor’s offer, we have provided some examples below which take into account an increased CPI of 3% and an increase of 5% in EUTF healthcare premiums.
Example #1
Chris is a R3 nine month faculty member at the minimum salary of $64,896, with family coverage under HMSA’s 80/20 Medical Plan, with vision, and dental coverage.
2016
- Salary – $64,896
- Annual Employee EUTF Premium Contribution – $7,892.16
2017
- Salary – $64,896
- Annual Employee EUTF Premium Contribution – $8,818.49 (increase of $926.33)
- CPI Impact – $1,946.88
In one year, Chris’ salary will be decreasing by $2,873.21 or a decrease of 4.4%, erasing the 4% pay increase received in 2016.
Example #2
Jamie is a rank 4 faculty member at the minimum salary, with two party coverage under HMSA’s 90/10 Medical Plan, with vision, and dental coverage.
2016
- Salary – $75,720
- Annual EUTF Premium Contribution – $8,990.16
2017
- Salary – $75,720
- Annual EUTF Premium Contribution – $9,850.75 (increase of $946.99)
- CPI Impact – $2,271.60
In one year, Jamie’s salary will be decreasing by $3,218.59, or 4.2%, erasing the 4% pay increase received in 2016.
