WEST MIFFLIN, Penn. — While the Congress debates healthcare reform, small credit unions insist they need resolution soon to cope with rising healthcare costs-but are uncertain if the current proposals deliver the answers.
"There is no way we can survive with these kinds of healthcare increases," said Michael Pastirik, CEO of the $37-million United Community FCU here. "Costs for my employee healthcare benefits went up 32% this year and 22% last year. Right now, for my credit union to pay for an employee's family benefits, it costs over $2,000 a month."
Pastirik is in favor of healthcare reform, but it has to be "the right package," expressing concern that the initial plan outlined by President Barack Obama may have been rushed and is potentially flawed. "It may be too soon to say whether we have the correct reform package," Pastirik told Credit Union Journal right before the House Democrats unveiled their 1,990-page bill.
Despite the legislation rolled out last week, uncertainty over the current proposals and what may eventually be passed into law, as well as more pressing economic matters, may be prompting the credit union industry to take a wait-and-see approach, sources suggested.
CUNA Communications VP Pat Keefe, while acknowledging to Credit Union Journal that healthcare reform is "not at the top of a long list" of initiatives the trade group is working on, said that in September CUNA President Dan Mica sent a letter sent to Senate Finance Committee Chairman Max Baucus (D-MT) and ranking Republican Charles Grassley of Iowa, calling for equal benefits and incentives for all small employers to provide healthcare coverage for workers.
Pastirik said United Community participates with more than 150 credit unions in the Pennsylvania CU Association's program that permits credit unions of all sizes to band together to form a larger risk pool. But costs remain an issue. "While we are part of a larger pool, we are still rated on our own claims experience."
Right now the best solution on the horizon for small credit unions is the tax credit, offered Pennsylvania CU Association President Jim McCormack, who is concerned about the ability of small CUs to cope with rising healthcare costs. "I know some small credit unions that have totally given up on providing healthcare," he said.
For many years state leagues have been helping credit unions partner to create larger risk pools, as does the Michigan League through its CUcorp subsidiary. For 19 years the Livonia, Mich.-based CUcorp has offered CUcare, which provides coverage to more than 160 CUs in the Great Lake State through Blue Cross and Blue Shield of Michigan. But even though working through CUcorp is less costly than a CU obtaining insurance on its own, "The costs are getting staggering, and it's getting tougher and tougher," said Drew Egan, CUcorp president and COO.
Egan explained that earlier this year CUcorp aligned with the Salus Group, a Sterling Heights, Mich.-based CUSO owned by five Michigan credit unions that provides employee benefit programs for small-to-large employers. The arrangement now gives participating Michigan CUs greater choice in health insurance carriers, shared Salus Group CEO Michael Brillati. "It allows Michigan credit unions to stay with the same risk pool but find another carrier, outside of Blue Cross and Blue Shield, that may better suit their needs."
Brillati said he is not against healthcare reform, but is not a fan of what is currently being proposed by Washington, and feels that many credit unions should hold that same opinion. "I don't think the current healthcare reform will benefit small credit unions," said Brillati, admitting it is a difficult call, especially since he has not been able to review the Democrats' latest bill. "The healthcare reform bills I have read through are not really addressing the issue of controlling healthcare costs. They are pointing to bringing in more competition."
Added Brillati, "There is nothing that states how this reform will help small business."
Brillati reminded that credit unions face three cost components: "The bottom line-they have to figure out ways to control the increased premium. The next thing is to try to control employee contribution. And a third element is controlling the benefits. Years ago the first thing we looked at was reducing the benefits to control the premium cost. Today we have reduced the benefits down so far that you can't reduce them any further. It's a critical situation for small credit unions."
Allene Ashmore, treasurer and manager of the $2.7-million Orange County Teachers CU in Orange, Texas, believes the Democrats' plan, despite proposing federal subsidies to small businesses and allowing them access to an insurance exchange, may not be the right solution for the smallest credit unions. If the plan requires all businesses to provide employee health insurance - which Ashmore believes it could - it won't significantly lower costs, "That would really hurt the small credit union," she said, noting that she is aware of a number of small CUs that are not providing healthcare coverage. "At my credit union we don't provide health insurance because I am the only employee and I am over 65. But if we had to provide coverage today, we couldn't afford to do that."
