By Kimberly Weisul In Milwaukee, a nonprofit and a union local are working together to make health insurance accessible and affordable for home-healthcare workers. In what may be a first, the two have devised an unusual setup that will allow the union's health-insurance plan to be available to small companies that are not union shops. Some sort of innovation has been sorely needed: Milwaukee's health-insurance premiums are 55% higher than those in other large Midwestern metropolitan areas, and premiums for small and midsize companies are expected to rise 23% this year.
So the Wisconsin Regional Training Partnership (WRTP), which trains unemployed and low-income workers for better jobs, is joining with a union representing home healthcare workers -- Service Employees International Union Local #150 (SEIU). Because of legal restrictions on the use of union healthcare funds, the union can't simply open up its plan to nonunion companies. To get around that obstacle, the union and WRTP will set up a professional employee outsourcing company (PEO), which will stand between the union and small home-healthcare agencies. The PEO will have a collective-bargaining agreement with the union, making it and its employees eligible for health insurance through the union.
BARGAIN PREMIUMS. Small companies that join will be required to sign over their workers to the PEO, which will become the legal employer. The healthcare company then leases back their employees. Like other PEOs, this one will handle payroll services. But it will also offer health insurance through the SEIU plan.
The monthly premium for a single person is projected to be under $200, while a family plan should come in at about $425. That's less than half what small Milwaukee home-healthcare businesses are routinely quoted. In order to participate, businesses must pay 80% of their workers' healthcare premiums, plus an administrative fee of about 0.5% of total payroll. The training partnership and the union hope to have the PEO up and running by January, 2004.
Money to set up the PEO is expected to come from private and foundation grants. After that, the PEO will be funded by the administrative fee. It could also get a boost from tax credits and wage subsidies for low-income workers. "Many of the employees that are being targeted would probably be eligible" for these tax credits and subsidies, says Eric Parker, executive director of the WRTP. But many small businesses don't take advantage of them because of the administrative costs involved.
"A PEO would have the expertise and the scale to be able to do so," says Parker, and, as the legal employer of the healthcare workers, it would be eligible. Newell Lesselle, executive director of nonprofit consultancy ICA Group, which helped design the program, says the PEO will probably become self-sufficient when roughly 1,000 workers have been signed up.
VARYING RESPONSES. The SEIU and WRTP had originally considered a plan that would cover nursing-home workers, especially those working in acute care. But a feasibility study indicated that the groups' best odds for success would be in home healthcare. "Right now, there are 40,000 people working in long-term care in Wisconsin. By 2008 there will be 92,000," says Debra Timko, President of SEIU Local #150. "There's no way you're going to recruit anyone to do this work unless they have health insurance."
Timko believes most of the businesses that sign up for the plan will have between 20 and 200 people. And she's optimistic that by the middle of 2004, some 10,000 workers could be covered.
The wild card, of course, is small businesses' willingness to enroll their employees. Timko, who has been pitching the program to outfits with which the union already has a friendly relationship, says: "I thought there would be opposition, but people are opening their arms. They're embracing it." For others, the union connection is likely to be a hurdle, despite assurances that the collective-bargaining aspect of the agreement won't affect wage scales.
IFS, BUTS, AND MAYBES. John Moschnik is the administrator for home-healthcare agency MedAmerica HealthCare of Wisconsin, which employs about 330 home-healthcare workers -- many making between $10 and $11 an hour. Because of the cost, only four people in the company participate in its healthcare plan, but Moschnik says the PEO's rates would be "very attractive."
Still, he thinks the PEO would be less than a slam dunk. "We might be losing some of our influence over our employees because they're being paid through another organization," says Moschnik. "You get involved with loyalty: who is the employee really working for?"
The union tie is also a concern. Still, says Annette Bernhardt, a senior policy analyst at New York University's Brennan Center for Justice, "The incentive for small companies to be able to provide health insurance to their employees is huge. I think that will overcome any barriers." In about seven months, home health-care workers in Milwaukee will know if she's right. Weisul covers small-business issues in New York