In a year when most other funds were hard-pressed to break even because of the stock market plummet, the Graphic Communications National Health and Welfare Fund made money on about $9 million in investments.

At the fund's annual trustees meeting, auditor Joseph M. Herishen of Salter & Company said: "The increase is amazing to me, however small it may be. This is one of the few funds that had increases in investment funds because it held more bonds than stock" during the past year.

Fund consultant William A. Rivers of The Segal Company reported that the fund also grew in participants by 13.6 percent over the year ending Sept. 30, 2001. He said the fund's average number of participants per month in all health benefit areas grew to 4,684 from 4,122 in 2000. Two new groups joined the fund over the year A&B Printing and Columbus Webb.

Conferring during a break are, from left: Neenah 77P Pres. Thomas Englebert; Grand Rapids 550M Pres. Gordon Beukema, and Evansville 571M Pres. Robert Lacey, who heads the appeals committee.

From left are Kimberly Stein, Charles Breitsman and Teresa Bauer of cds, which administers the national health and welfare fund, and Milwaukee-Madison 577M Secy.-Treas. Michael Sippy.

Trustees from left are James Gienke of the Arandell Corp. in Milwaukee and Phil Schick and David Russi, Midwest Newspaper 128N, Columbus, Ohio.

From left are: Milwaukee-Madison 577M Secy.-Treas. Michael Sippy; Lynda Buchanan, assistant administrator of the Indianapolis 303M fund; and Washington 449S Pres. Robert Barber.

The national health and welfare fund was established in 1997 out of the former Graphic Communications Health and Welfare Pooling Fund. The restructured national fund is self-insured in most benefit areas and accepts groups that belong to Taft-Hartley jointly trusteed funds as well as individual employers whose contracts with GCIU locals require contributions to the national fund.

The national fund offers medical, prescription drug, vision, dental, Medicare supplement, disability, and accidental death and dismemberment coverage. Groups participating in the fund choose the coverage areas they want and also have a choice between several medical, prescription drug, vision, and dental plans that vary by cost, co-pays, deductibles, and benefit levels.

The fund employs Central Data Services Inc. (cds) to administer the fund and pay claims for medical, Medicare supplement, dental, and disability. Preferred provider organization (PPO) networks affiliated with the fund for hospital and physician services include Private Healthcare Systems (PHCS), Associates for Health Care (AHC) for groups in Wisconsin, and HealthLink for a group in Illinois.

Prescription drug coverage is provided by National Prescription Administrators (NPA) and Eckerd Health Services for a group in Illinois. National Vision Administrators (NVA) provides vision coverage, and Aetna provides accidental death and dismemberment coverage.

The fund is governed by a board of trustees made up of union and employer representatives. Andrew Douglas of Philadelphia 14M is the union co-chairman of the fund. Robert Lindgren of Printing Industries of America, who is a trustee of the Los Angeles 404M fund, serves as employer co-chairman. In between annual meetings of the trustees, the fund is directed by a joint executive committee.

Health care inflation

Like groups all over the nation, local unions and employers participating in the fund were hit hard by heavy inflation in the cost of medical care and prescription drugs, as well as increased utilization.

Douglas said that, "after a period of relatively stable health care costs during the 90s, double-digit trends are returning.... These trends have put enormous pressure on the fund's cash flow and reserves to say nothing of the pressure it's going to put on your locals and their members."

Despite the national trends, Douglas pledged that the fund "will try to deliver the highest benefit level at the lowest cost that we can."

The U.S. Centers for Medicare and Medicaid Services (CMS) reported that health care spending increased 6.9 percent in 2000, compared with 5.7 percent in 1999. Prescription drug spending alone increased 17.3 percent in 2000, down from the 19.2 increase in 1999, CMS said. Private surveys showed an increase in health care costs of more than 11.2 percent in 2001, with even higher levels predicted for 2002. Hewitt Associates projected increases of 13 to 16 percent for 2002.

Consequently, surveys have found that insurance companies are seeking much higher premium increases, depending on the size and medical cost experience of the covered group and the geographical area [see related article].

Rivers reported that the fund over the year experienced increases of 15.2 percent for medical benefits and 45.6 percent for prescription drug benefits. Vision benefits rose by 24.4 percent and dental benefits by 0.4 percent over the year.

Also affecting increased costs, Rivers said, are providers' reductions in discounts on charges for patients using preferred provider organizations(PPOs). Provider discounts for the fund averaged 40.9 percent in 2000, compared with 31.9 percent in 2001.

In its report to the fund, Segal projected for 2002 a 12 percent increase in medical benefits; 20 percent for prescription drug benefits; 9 percent for Medicare supplemental and dental benefits; 5 percent for short-term disability benefits; and 3 percent for vision benefits.

With Segal's projections of a loss in reserves due to these increased costs, fund trustees approved an aggregate premium increase of about 21 percent. Rivers stressed that the specific premium increases for each area of coverage would vary so that participating funds only pay increases in coverage areas they subscribe to and so that each coverage area is self-sustaining.

GCIU Vice Pres. Lawrence Martinez, who serves as fund secretary, said he is "encouraged by the diligence and commitment of both union and employer trustees to meet challenges head on."

"These same problems of high medical care and prescription drug inflation and increased utilization are being experienced by employers and employees all over the country," Martinez said. "Other groups in this situation most often work at odds against each other through cost-shifting and heavy benefit reductions. We are truly fortunate to participate in a fund where employer and employee trustees work together as one toward the same goal: providing the highest benefit levels possible at the lowest possible costs."

New model plans

To give participating groups more flexibility to absorb premium increases, fund trustees adopted new lower-premium model plans for medical, dental, and prescription drug coverage. The new models offer the same coverage with higher deductibles, co-pays and out-of-pocket maximums than the current model plans.

Stephanie Wentworth of PHCS reported that the PPO network increased its affiliated hospitals to 3,457 over the year from 3,027 in 2000. The number of providers participating in PHCS during 2001 increased to 356,344 from 313,634 in 2000.

Prescription drug costs rise

Joe Reardon of NPA reported that, shortly before the trustees meeting, NPA was acquired by Express Scripts, which provides prescription drug coverage for some 47 million people and has facilities in seven states and Canada. Founded nearly 25 years ago and headquartered in New Jersey, the privately held NPA provides network pharmacy claims processing, mail pharmacy services, formulary management, benefit design, and prescription monitoring and management services.

Reardon said prescription drug usage per GCIU fund cardholder has declined in each of the past three years, "which shows us that we're managing the usage well." He said the GCIU group is trending at a 6 percent increase in the average cost per cardholder, which is better than the national average and the NPA average of nearly 13 percent.

However, Reardon stressed, with drug costs continuing to increase, fund members need to continue to encourage the use of formularies, for which NPA negotiates discounts with pharmaceutical manufacturers, instead of brand name prescription drugs.

Another way to help reduce costs is through disease management programs in high cost categories, such as ulcers, allergies, high cholesterol, asthma, pain management, hypertension, mental health, and women's and men's health.

Reardon said analysts attribute the rise in prescription drug spending to an aging population and lifestyle factors, such as exercise, diet, and smoking. He said other factors include drug companies' price escalation, their influence on doctors to prescribe brand name drugs, and their heavy advertising campaigns to persuade patients to ask their doctors for brand names.

As drug costs continue to rise, Reardon said, the trend probably will develop away from co-pays in prescription drug plans, where the cardholder pays a set dollar amount per prescription, to co-insurance, where the cardholder pays a percentage of the actual cost of a prescription.

One of the major advantages to members of the health and welfare fund is that individuals can appeal reimbursement issues to a committee of union and employer trustees, whose interests lie in the members and the fund instead of profit. Evansville 571M Pres. Robert Lacey, who heads the appeals committee, said the "process has served the fund very well. Through the committee's efforts, many network provider issues, such as the use of multiple tax identification numbers, have virtually vanished." He noted that while the number of participants in the fund nearly doubled in five years, the number of appeals stayed about the same.

Trustees heard a report from Rivers of The Segal Company on the Health Insurance Portability and Accountability Act of 1996 (HIPAA), which requires health providers and insurance companies and other administrators to exchange health data electronically.

Rivers said HIPAA requirements mean that the national fund and local funds and all administrative agencies, provider networks, and providers must acquire the hardware and software for electronic data interchange that are in compliance with federal standards. In the long-term, he said, the law is designed to promote greater efficiency and reduce costs in the health care industry. However, in the short-term, compliance with the law will be very expensive and complex to implement, he noted.

In other business, re-elected to the executive committee were Lacey, Grand Rapids 550M Pres. Gordon Beukema, and Chris Feagans of Keller-Crescent Co., who serves as a trustee of the Local 571M fund. Newly elected to the committee was Charles Putterbaugh of Lincoln Printing Corp., and a trustee of the Local 550M fund.

Douglas noted the retirement of long-time trustees Joseph Lackman, the employer trustee for the Local 14M fund who served for many years as employer co-chairman of the fund, and Carl Jankowski, the employer trustee of the Neenah 77P fund who served on the executive committee. "We have the sincerest appreciation for their long and valued service," Douglas said.

At the health and welfare fund's annual meeting, are, from left: Kansas City 235M Pres. James Miller, and Neenah 77P employer trustees Donna Dee and Patrick Dier and Neenah 77P trustee Tim Wenzlaff.

From left are: Washington 144B Pres. Gerald Weikel; Local 144B employer trustee Michael Frazier of McArdle Printing; and Steve Bearden of Linemark Printing, employer trustee of the Washington 449S fund.