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Preconference Sessions
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Basin Electric members listen during the preconference session at |
Preconference session excerpts
Skyrocketing Health care and Pension Costs: What they mean for cooperatives
Paul Sukut, Basin Electric Senior Vice President and Deputy General Manager, discussed changes in employer-provided healthcare.
"From an employer perspective, we’re (Basin Electric) not the exception here; health care is the fastest growing expense for employers. Health care premiums have basically doubled since year 2000. Job-related insurance expected to increase 100 percent over the next 10 years," Sukut said.
A health care panel was also part of the preconference session. Members of the panel included Dennis Hill, North Dakota Association of Rural Electric Cooperatives executive vice president and general manager; Linda Otterson, Cass County Electric Cooperative manager of Human Resources; and Dale Niezwaag, Basin Electric senior legislative representative. Sharon Klein, Basin Electric manager of Human Resources, served as the moderator.
Sukut also discussed the changes taking place with employee benefits, specifically pension plans.
A discussion on defined benefit plans was lead by Klein and Mary Jo Arthur, National Rural Electric Cooperative Association senior principal retirement plan consultant.
Employee benefits discussion excerpts
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Sharon Klein |
Mary Jo Arthur |
Paul Sukut |
Paul Sukut gave a brief overview of the effect increased pension costs have had on Basin Electric.
"We're all facing a 35 percent increase in 2010. ... If we at Basin Electric have to do this, it's nearly a one mill increase to us just for pension."
Sharon Klein discussed what Basin Electric has done in recent years to try and keep cooperative costs manageable.
"As of Jan. 1, 2006, for new hires only, we left our RS (Retirement Security) Plan in place, but what we did is we changed the factor. We reduced it from a two percent factor to a one percent factor. ... And the other thing we did, given the fact that we reduced the factor for the new hires, we increased the 401k employer match by one percent. So, we went from a five percent to a six percent 401k match. ... Since January 2006 through year to date, ... we've had a total cost savings of $4.2 million. That's huge given the dollars we expend for the retirement plan."
Mary Jo Arthur provided a presentation on the National Rural Electric Cooperative Association's Defined Benefit Plan.
"It may surprise you to hear me say this, but I do believe there is room for most co-ops to make changes in their pension design."
"I think one of the important things to consider when you're looking at your retirement program, is what's going to provide an appropriate retirement income for an employee who came to you at a young age, gave their whole career to you, has physically worn out their body, is ready to retire and now needs to live comfortably."
"What's been happening to our assets since Jan. 1? We all know 2008 was an extremely difficult year in the stock market. NRECA took less of a hit than most corporate plans, but still we did take a hit. It's hurt us, it's hurt the co-ops. We have to work through this over time. One of the things I was looking at is how quickly are we going to recover? ... As of Sept. 30, our return for the year has been 21 percent. ... To be up 21 percent from Jan. 1, we not only recovered the losses from the beginning of the year, but we've gained an additional 21 percent on top of that. ..."
"So, we've made substantial progress toward getting the assets back to the value we need them to be."
Health care panel presentation excerpts
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Dennis Hill |
Linda Otterson |
Dale Niezwaag |
Dennis Hill talked about the co-op business model and gave examples of health care cooperatives.
"... It’s an interesting debate (health care reform) and one that really gives us a chance to go back and think through why we formed cooperatives in the first place. What is it that they bring to this table in so many other walks of life? Can they apply in the health care debate as well? There are some successful examples of health care cooperatives in the country and maybe some that we want to study in more detail and see where it goes from there."
"I want to say a word about the debate as it applies to us here in North Dakota and to our friends in Montana because we have two leading advocates (Sen. Conrad and Sen. Baucus) of what is considered to be the CO-OP model in the current health care reform debate. If you’ve looked at that legislation, the CO-OP model emphasizes that these are considered to be in the Senate legislation consumer-owned and oriented plans. Those are kind of important words as we talk about this because the model they are talking about in some of this legislation is not necessarily a pure, if you will, cooperative model like we might have here at Basin Electric or a distribution cooperative."
"... I think we do need to pay attention to this and think about it in terms of our cooperatives. I think we would all agree that we have proven that the cooperative model can work in so many sectors and we ought not dismiss out of hand the notion that it can work in health care when there are some very successful models operating across the country."
Linda Otterson highlighted what Cass County Electric Cooperative has implemented regarding health care benefits.
Otterson explained that Cass County currently has a high deductible health insurance coverage plan for its employees and offers a health savings account for its employees.
"When it comes to employee costs, do not assume that a high deductible plan/health savings account is going to cost your employees more. We found, this is just the worst case scenario."
"The key to the success of our program, we feel, is employee responsibility for wellness and a company providing opportunities for wellness. Wellness is a choice and what we hope to do is get employees thinking wellness, making choices and making a lifestyle change."
Otterness also talked about Cass County's wellness program and rewarding employees for maintaining good health.
"What we tried to do is take the focus off of sickness. Health insurance, to me, is just for sickness. Transferring over to wellness, get employees thinking about those lifestyle choices. I like this little saying about being a repair shop because, for me, I do not want to be a fixer-upper."
Dale Niezwaag provided an overview of the current health care proposals in Congress.
"We’re not here to advocate any position, legislation or plan, we’re here to simply provide information. What we want to do is provide some information on what is going on and how that’s going to work."
"There are 12 proposals, but there’s really three out there that are being looked at right now, which will turn into two very shortly. We’ve got the America’s Healthy Future Act, this came out of the Senate Finance Committee with Senator Baucus. We’ve got the American’s Affordable Health Choices Act, this is out of the Senate HELP Committee, which stands for Health Education Labor and Pensions Committee. ... The last bill we’ve got is the Affordable Health Care for Americans Act. Representative Nancy Pelosi came out with that."
"Now there’s a pretty wide set of common points that are in legislation from the House side and the Senate side. The first one is there’s no changes for existing coverage. If you want to keep your current health care plan, you keep your current health care plan, that’s not a problem. They don’t want any exclusions for pre-existing conditions, so they bring you on to the health care plan. No limiting coverage due to illness. They all contain public options. They also provide penalties for either you, as person not having health care insurance or for you, as an employer not providing health care insurance. There is an exception for small employers. And for very small employers they provide tax credits and they’re also putting a new issue in as far as limiting things based on your payroll."
"As a piece of information, there’s a Web site called the Kaiser Family Foundation, www.kff.org/healthreform. They don’t give you a lot of opinions on what’s going on. What they do is have a nice comparison chart that lays out all the bills."
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