Cost projections for the adjunct health insurance plan for the Fiscal Year 2012 (July 1, 2011 through June 30, 2012) are $14,050,000. CUNY pays $2,830,000 per year. That is a shortfall of $11,200,000 which is absorbed by the Fund's financial reserves. On an individual basis, the annualized cost as of July 2011 is $8,118 for single coverage, compared to the annual employer contribution of $1,622. The Fiscal Year 2012 annual projection includes an estimated rate hike of 12% on November 1, 2011, for the Empire contract and 10% on February 1, 2012, for the HIP contract. The covered membership is projected to increase by 2%. These figures are conservative, based on prior years' experience.

The relevant history need only look back nine years. In Fiscal Year 2003 (July 1, 2002 through June 30, 2003) the Welfare Fund operated on a $26.38 million contribution from the employer (CUNY) and spent $29.92 million on benefits and administration. That produced a deficit of $3.54 million.

Of the total contribution, $23.55 million was the annual negotiated per capita payment on behalf of each full-time active employee and each retiree.

As part of the total CUNY also contributes $2.83 million for adjuncts - an increase in FY 2003 over the prior year’s adjunct contribution of $1.30 million. Nine years later, the adjunct contribution remains at $2.83 million. The Welfare Fund in FY 2003 purchased Empire Blue Cross HMO coverage for adjuncts in the amount of $3.43 million. The Trustees considered the $0.60 million difference affordable and temporary, as other solutions to the shortfall were pursued.

The intervening years saw total costs increase dramatically but the contribution remain constant.

It is also instructive to view on a per member basis:

As enrollment increases, contribution per member actually decreases.

There have been changes to the benefit structure due to overall financial concerns, but it would be misleading to say that, at any point in time, they were directly related to the costs of adjunct care. The causality of underfunding is not an issue when Trustees need to decide upon benefit adjustments, since all funding is co-mingled. The Fund is administered in accordance with the Summary Plan Description of benefits, and the provisions of the Trust Indenture as interpreted by the Trustees. All union welfare funds similar to this Fund have a degree of "subsidization" of one group to another, sometimes temporary and sometimes permanent by design.

In 2003, as a result of the poor financial situation of FY 2003 (which ended June 30, 2003) resulting in an operating deficit of $3.54 million, the trustees reduced

the dental benefit, increased deductibles and lowered the fee schedule in the extended medical benefit and eliminated the life insurance program. That was clearly not a result of the minor shortfall on the adjunct program. But as the shortfall became larger in subsequent years, the Fund found it necessary to contain costs of other benefits.

There are always deficit funding situations that are typical of all health insurance plans, but unlike health insurance companies, the Fund does not track all "categories" of members. Payment for the sicker is funded by the contributions made for all. The contribution CUNY makes for retirees is often not proportional to the cost of their benefits, although that will be changing with the Fund now able to take advantage of changes in Medicare drug programs.

The PSC-CUNY Welfare Fund is a trust established under New York State Law to provide supplemental health benefits to a group of participants defined by the terms of a Trust Indenture among the Employer (CUNY), the Union (Professional Staff Congress (CUNY) AFT Local 2334) and the Fund. The Welfare Fund is governed by a Board of Trustees which acts in accordance with by-laws and is charged with the fiduciary responsibility to administer the Fund in a prudent and legal fashion. The Fund accepts contribution income from the employer in accordance with the terms of the collective bargaining agreement and expends funds in accordance with a (Summary) Plan Description established by the Board and subject to change from time to time. "Supplemental health benefits" typically include, but are not limited to prescription drugs, dental, disability, optical, etc. The list may incorporate other categories of health care--for example, adjunct basic health insurance.

Under the terms of the Trust Indenture and pertinent state and federal law, Trustees of the Fund must at all times act in the best interests of the participants of the Fund. It is their responsibility, with the guidance of legal counsel and other professionals, to interpret what this entails. The understanding for an extended period of time was that structural solutions to the adjunct funding issue were on the horizon and it was in the best interests of all participants to continue provision of the benefit. As the funding gap expanded at an increasing pace and the reserves became strained, a date had to be set for a revision of the funding arrangement or the benefit would need to undergo radical change. All decisions were made legally and responsibly within the terms of applicable law and the documents governing the Welfare Fund.

It should be noted that two of CUNY’s management staff are on the Board of Trustees by the terms of the Trust Indenture and due to the inclusion of many management titles as Fund participants, e.g., computer managers, deans, building superintendents, security directors, college presidents and all of the chancellor positions.

The current adjunct basic health insurance program through Empire or HIP will be discontinued. The union and the Welfare Fund have already begun investigations into what can replace that program. There is discussion about a peer committee to counsel and direct people toward other programs to which they may be eligible. COBRA may be available but will be (by regulation) very expensive.

The actual form of a "severely reduced benefit" has not been determined. Initial reviews have found no reputable or useful form of health insurance (even with high deductibles or very limited coverage) available in the market for $1,600 per year [the present calculated funding available per person per year.] The option to radically alter the eligibility rules - the total CUNY contribution for adjuncts could cover only about 350 people - is not being considered. The "voucher" approach - cutting a check and wishing the best - is not a serious solution because individual insurance is considerably more expensive than group insurance. The actual form of the benefit will need to be determined as the deadline approaches. There will be consultation with advisory groups and membership surveys of needs and alternative opportunities.

What if adjuncts contributed to part of the premium costs?

Asking adjuncts to pay a portion of the premium makes sense on the face of it; however, the problem with this idea is that the amount that adjuncts would be asked to contribute would be prohibitively high and ever-increasing, as the number of covered adjuncts and the premium costs continue to go up each year.

For instance, if an adjunct were paying the portion of the average Blue Cross contract that is not currently met by CUNY, the annual co-payment this year would be $6,682 for individual coverage (out of $8,357 per contract) and $20,355 for a family (out of $22,030). In 2012 the co-payments would increase to $7,476 and $22,441, respectively. And the price would go up every year thereafter. It is plain that such costs would be staggeringly expensive for adjunct employees.