# LCMS Convention Workbook_St. Louis Missouri_2007_S98 # Machine transcription, uncorrected — CHI Digital Archive (demonstration) 98 SYNOD REPORTS Changes implemented as part of ‘The Church’s Plan” (related to key study findings) 1. We created the Concordia Retirement Savings Plan (CRSP) with a 50 percent employer match of the first 2 percent of compensation contributed by the worker. 2. The CRSP design allows the employer to choose a higher level of match. The employer match should encourage worker responsibility and greater savings for retirement. 3. The CRSP provides an opportunity for mid-career hires to maximize savings and an attractive option for them to roll over any tax-deferred retirement savings they had accumulated in their previous employer’s plan. 4. We introduced the Retiree Medical Supplement (RMS) component of the CRP to help retired workers cover a portion of their medical costs. 5. The RMS design directly supports retiree health care costs. 6. The RMS design provides an incentive to stay employed in the LCMS and in the CHP to retirement age. 7. The differential in CRP contribution rates between married and single was eliminated. 8. Sensitivity to retiree increases was reinforced, but an automatic consumer price increase was not implemented. 9. The estimated increase in contribution rate to meet current benefits is approximately 2 percent of compensation. 10. The estimated increase to provide for the RMS and CRSP ben- efit, as well as other minor changes, is approximately 1.2 per- cent. The combined increase estimated at 3.2 percent is being phased in over four years (2006 through 2009). Acceptance of The Church’s Plan (TCP) The message of “Walking Together” with The Church’s Plan has been heard and embraced throughout the Synod. As of Feb. 16, 2007, The Church’s Plan participation data reflects the following: ¢ CRP members that are currently in TCP 23,194 71% ¢LCMS districts that have adopted TCP 31 89% ¢ LCMS colleges and seminaries 10 83% We will continue to work with those employers that have not yet adopted The Church’s Plan to hopefully complete such adop- tion during 2007. The Church’s Plan, in the view of the LCMS Leadership, is the best answer for both the worker and employer, and we need to allow another year for the employers to more com- pletely understand the significant advantages it offers. The Concordia Health Plan The United States Health Care Environment From a broad health care delivery system perspective, let us offer a few quotes from a “60 Minutes” program broadcast March 4, 2007. David Walker, comptroller general of the United States, offered these observations. “On cost, we’re number one in the world. We spend 50 percent more of our economy on health care than any nation on earth. We have the largest uninsured population of any major industrialized nation. We have above-average infant mortality, below-average life expectancy, and much-higher-than- average medical error rates for an industrialized nation. It’s the number-one fiscal challenge for the federal government ... for state government ... and for American business.” Bringing this a little closer to home, health care costs in the United States are increasing at more than twice the rate of the Con- sumer Price Index. The Kaiser Family Foundation research indi- cates that health care cost/availability is the number-one worry of most U.S. workers. Most employers have experienced double-digit rate increases in their health costs in recent years. Those that have 2007 Convention Workbook experienced less than double-digit increases have likely passed on a larger portion of the total cost to their employees. The LCMS congregations and other LCMS organizations are not exempt from these budget pressures. Often, this pressure re- sults in difficult financial decisions regarding ministry and staffing. We totally understand this and recognize our responsibility to be good stewards over the assets entrusted to the Concordia Plans. Does the Concordia Health Plan Provide a Valuable Service to the LCMS? This past triennium we stepped back and tried to answer that and many other related questions. What, if any, competitive ad- vantages do we have? What competitive disadvantageous do we have? Why would we likely not be competitive in a specific em- ployer situation? Is the best answer for the LCMS possibly a dif- ferent answer than the best current financial answer for the specific employer? What are the advantages/disadvantages of community rating versus experience rating? Should we change from community rating to demographic/experience (age, sex, and health status) rating? We analyzed the situation and presented our conclusions related to these questions to the same focus groups mentioned previously under the heading “The Church’s Plan.” Key Study Findings and Issues Discussed with Focus Groups The Concordia Health Plan (CHP) provides a very valuable ser- vice for the LCMS: 1. The CHP has many competitive advantages over small group in- surance products. * Pricing Cost Advantages i. It pays no commissions. ii. It has very low corporate overhead. iii. As a part of the LCMS, it has low sales/marketing ex- penses. iv. It is not required to pay premium or income tax. v. It is not required to fund state guarantee assessment pools. vi. It is exempt from many state mandates. vii. It is not required to make a profit for its owners. ¢ Product Advantages i. Portability when transferring among LCMS covered em- ployers. Enrolled surviving dependents of deceased workers are al- lowed to remain in the plan. . Children who are full-time students may remain in the plan until age 27. iv. Retiree coverage is available. v. Waived contributions when disabled. vi. Plan benefit design is consistent with LCMS beliefs. 2. The CHP enables the 6,000 small LCMS employers to band to- gether to form a 30,000-member purchasing group. Additional purchasing leverage (more than 100,000 lives) is obtained through Church Benefit Association coalitions. 3. Access to actual service providers (BCBS, Express Scripts, Cigna, MetLife, etc.) is accomplished through competitive pro- posals at prices that compare favorably to market rates. 4. The CHP plan design uses reasonable medical management cost- control conventions such as: a three-step drug formulary, generic drug incentives, and step therapy. 5. The combination of the listed factors allows the individual small LCMS employer to achieve all of the benefits of very large cor- porations that self-insure their health insurance programs. 6. Demographic/experience rating would provide cheaper rates for some (the younger/healthier groups) but would make coverage unaffordable and even unavailable for some (the older/less healthy groups). - =: il. = ii _