Healthcare reform and orchestras

There doesn’t seem to have been anything in the press or blogosphere about the effect of healthcare reform (as of last night, and pending the signature of the President, the law of the land) on orchestras. One would think that the effect of HCR on 0.00002% of the national economy would be bigger news.

No doubt now that HCR is passed the League and perhaps the AFM will be looking at its potential effects on our field, and will come up with something definitive and helpful. But I think taking a look at it now is useful, even in the absence of a lot of detail to analyze.

Over the short term, HCR will likely have little effect, either on orchestras that offer health insurance or on orchestras that don’t. The greatest potential industry-specific effects down the road would appear to be these:

• Will orchestras be required to provide coverage, and to who?
• The impact of mandatory coverage on freelancers (subs and extras)
• The impact of the “Cadillac plan” excise tax on orchestras
• The impact of HCR on Taft-Hartley plans

Most ICSOM orchestras already provide health insurance to their full-time musicians, of course (I believe the only exception is Grant Park, which is the only truly seasonal ICSOM orchestra). It doesn’t appear that HCR is going to have much impact on that. The concept of providing health insurance to full-time musicians hasn’t been controversial in our field for a long time; what’s been at issue for years and years at bargaining tables around the country is the quality of the coverage, not whether or not to have it. If HCR has any effect on that, it will be in the direction of encouraging orchestras to retain coverage.

What will be interesting will be whether HCR will mandate any kind of coverage of subs and extras (or provide penalties for non-coverage). No doubt this will be something that both the League and the AFM will be looking at carefully. My suspicion is that what mandates are in the bill won’t affect orchestras; by the “normal” measurements (ie hours worked annually), even full-time musicians arguably aren’t considered full-time for many relevant laws. (There was some controversy, when the Family Medical Leave Act was passed, whether or not it covered orchestras, as it defined an “eligible employee” (ie, full-time) as one who worked 1,250 or more hours per year.)

It seems likely that subs and extras who are full-time freelancers (and not on a spouse’s policy) may have much cheaper and more assured access to health insurance than is currently the case. That has to be good news for orchestras. Our field is very dependent on per-service workers. In the very near future, being able to make a living as a freelancer will also mean being able to afford, and actually purchase, health insurance. That is not only good for freelancers; it will help reduce the inequalities in orchestras between full-time musicians and the subs and extras who sit next to them.

HCR includes an excise tax on so-called “Cadillac” health plans provided by employers; a sore point for unions, which generally have given ground on wages over the past decade or so in order to maintain quality health insurance for their members:

In its current iteration, put forward in Obama’s proposal, eligible health benefits would face a 40 percent surtax, to be paid by insurers, who would, in turn pass the costs on to employers, etc. The Cadillac tax would affect family plans in excess of $27,500 and individual plans of more than $10,200. To put those numbers in context, the average family insurance plan is worth $13,500. Even if you have managed to get your hands on insurance benefits of that magnitude, the only part that gets taxed is the money that comes in over the $27,500 line (say your plan is worth $28,000, the insurance company would only have to pay taxes on 40 percent of $500). Dental and eye care are not included, and the tax won’t go into effect until 2018.

Will this affect any orchestras? I suspect that it will directly affect very few, if any, and that the impact will be minor or non-existent. I know my orchestra spends nothing close to these figures on what we regard as pretty decent coverage – and Wisconsin is one of the most expensive states in the country for health insurance. If there are orchestras whose premiums are trending towards the limits in the law, they’ve got 8 years to fix it, which is at least two bargaining cycles.

The potential impact of HCR on Taft-Hartley plans is of current interest only to orchestras and musicians in Locals with union health plans and consequent H&W contributions. I don’t know the exact number of AFM locals offering such plans; although at least two do (New York and LA). More interesting would be if HCR made it easier to form an industry-wide health plan along the lines of the AFM-EP Fund. There has been intermittent discussion of this over the years, with some formal discussions in (I believe) 2002-2003 between the AFM and the major managers. At the time, the biggest obstacle to proceeding was the Taft-Hartley requirement that most of the employees covered be working under a CBA; managements were understandably not interested in going to the trouble of forming a national plan that didn’t cover staffs.

My guess is that HCR will make the notion of a national plan for orchestra musicians less appealing, even if there is something in HCR that lowers the Taft-Hartley barrier, which there doesn’t appear to be.

To summarize: HCR is hardly a non-event for orchestras. But I doubt it’s critically important in terms of institutional survival.