Boeing employees informed higher health care deductibles, new co-pays on the way

Boeing tells employees they would have definitely made some changes to the health care plans it offered for competitive reasons, but they point to the Democrat’s and Obama’s health care legislation, and lifestyle changes as additional reasons for change.

Boeing will be introducing 10 percent and 20 percent co-pays during the next two years and they will be increasing deductibles for individual and family plans. Boeing is known for offering generous health care benefits to employees, so generous as a matter of fact, the company is concerned many employees could eventually be hit by the 40 percent tax on so-called “Cadillac plans” that takes effect in seven years. They are trying to avoid that hit.

From second-hand experience, I know Boeing offered a very generous plan to salaried employees. During a discussion with an Boeing employee and his spouse, I was surprised about the very low out-of-pocket costs employees had. The discussion eventually led my “how $15 co-pays destroyed the health care system” topic and they both agreed the cost of mandates would be passed on to them.

Maybe the Obama administration and Democrats in Washington think the Boeing plan was too generous. … You think I’m being sarcastic don’t you?

From the AP.

In a letter mailed to employees late last week, the company cited the overhaul as part of the reason it is asking some 90,000 nonunion workers to pay significantly more for their health plan next year. A copy of the letter was obtained Monday by The Associated Press.

“The newly enacted health care reform legislation, while intended to expand access to care for millions of uninsured Americans, is also adding cost pressure as requirements of the new law are phased in over the next several years,” wrote Rick Stephens, Boeing’s senior vice president for human resources.

Two items to note. The union workers at Boeing are not feeling the pinch this year, but you can be certain future contract negotiations will be a hard-fought battle when it comes to passing along higher costs.

Second, Boeing’s primary competitor Airbus, has a health care plan primary shouldered by a single-payer government system. Everyone pays high taxes while being provided a lower quality benefit plan as compared to what Boeing employees are offered. With stiff competition between the two companies – including the business fight to supply the U.S. Air Force its refueling tanker – Boeing needs to monitor health care costs to ensure they can keep making planes.

Boeing is pointing to three primary factors when it comes to passing increased health care costs to employees. First is competition, second was the Obama health care mandates, and the third factor was our unhealthy lifestyle. (Read more about our unhealthy lifestyle and how it is a main factor increasing the cost of health care.)

Update: It’s not all about unhealthy lifestyles – as an example the diabetes epidemic – it’s also about the increase in the use of drugs, MRIs, joint replacements and non-evasive surgeries that actually make our lives better every day.

Now remember everyone, the big bad insurance companies have almost nothing to do with these price increases. Boeing is self-insured, meaning payments to physicians, hospitals and other health care providers comes directly from Boeing, with a health insurance company providing the service to administer those plans and benefits only. Boeing builds the plans, Boeing makes the decision what they will and will not cover.

Update: Ed Morrissey writes at Hot Air.

[M]assively comprehensive plans really are a part of the problem in escalating health-care costs.  They completely screen pricing information from consumers, which leads to overuse of the system.  They also shift massive amounts of compensation away from employees and to insurance companies, although employees generally don’t see it because that system has been in place since World War II and the wage mandates from the federal government.  Any real reform effort would have to start at disconnecting the employer-health insurance connection, and in pushing people away from massively comprehensive insurance in favor of HSAs and serious/catastrophic insurance coverage.  Only in that direction can we restore pricing mechanisms that produce supply to meet demand.

I want to point out that I think Morrissey overplayed the Obamacare part of the cost equation, and underplayed the lifestyle part of the equation in his post. Remember that Boeing stated competition was the main factor in play, with Obamacare second and lifestyle third.

That said, he made a great point about companies working to get their benefit plans under the magic Cadillac rating dollar figure. The Democrats were counting on billions of dollars in tax revenue to help offset the cost of this boondoggle.

8 replies
  1. sammy22
    sammy22 says:

    Sounds to me like Boeing has the right idea. They seem to trying to get ahead of the curve that had a significant impact on essentially sinking GM, e.g. generous benefits for working and retired employees.

  2. Dimsdale
    Dimsdale says:

    Agreed.  The time for overly generous benefits are past, and people value more what they have to pay for. Nobody ever washed a rented car.


    Yet another reason why health care should be bought and paid for by the recipient, not their company.

  3. NH-Jim
    NH-Jim says:

    The dirty “word” out there is HMO.? What was promised as the saving grace to a system that wasn’t even broken turned into the government mandated system that has spiraled into the abyss.? The Health Maintenance Organization Act of 1973 was the boondoggle of that era.? What had begun as a cost containment program for businesses is now shown by research to be non-effective (which is obvious) at reducing costs compared to non-HMO plans. (Duh!)? Although the consumers costs involved are reduced, the plans don’t affect the total expenditures by insurers because of over-utilization.
    Has everyone forgotten the outcry against HMO’s in the early 70’s.? People foresaw this happening, warned about it, and, guess what happened?? They were right!
    Now we have HMO Act of 73 on steroids.? Thanks a helluva lot Congress & Mr. President.? I point the finger of blame at you.

  4. sammy22
    sammy22 says:

    I am still wondering how Airbus gives serious competition to Boeing being: 1) a EU Consortium 2) in countries w/ a single payer health care system 3) in countries w/ high taxes.

  5. sammy22
    sammy22 says:

    W/o the US tax money (Defense Dept) much of the US aerospace industry would not even be able to compete w/ Airbus. Even the Internet is a product of US military funding. You'd not call this subsidy would you?

  6. Dimsdale
    Dimsdale says:

    Come to think of it, at least the military is actually purchasing a product for its own use.  No doubt they military is required to purchase domestic items for security purposes.  I don't know of the intent is to subsidize Boeing into solvency or competitiveness though, as the EU apparently was doing.


    I recall that the internet was just a spinoff of Arpanet, wasn't it?  Then in spread to academia, then industry and the public.  One has to wonder if it wouldn't have been invented anyway, eventually, by non military sources.


    I guess the question now is: will we eventually be subsidizing Boeing employee's health care, or at least driving up the costs of their excellent plan through taxes on "cadillac plans" mandates, etc?

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