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Association of
Ameritech/SBC Retirees
January 29, 2006
Ms. Karen Jennings Senior Executive Vice President Human Resources and Communications AT&T Inc.
Dear Ms. Jennings,
We met at the last year at the SBC annual stockholder’s meeting in San Antonio. As you may recall, I was there to speak on behalf of myself and other concerned stockholders and retirees on several subjects. I am writing today to express my concern about the new AT&T/SBC Medical Plan that was introduced this year.
While I would prefer that the company look more toward minimizing healthcare costs rather than pushing all cost increases to retired employees, I applaud its efforts to minimize and control variable employee health benefit costs because in doing so it will improve the Company’s bottom line and, hopefully, improve the company stock price for a great number of retired stockholders. I can also buy into an SBC Medical Plan philosophy that as was identified in the June 2005 SBC Benefits Update letter suggesting that this change would “generate significant savings for most participants, focuses on wellness and preventative care and provides incentives to actively engage retirees in decisions about their healthcare”.
However, I wonder whether the United Healthcare plan achieves that philosophical goal. I say that based on several observations. One is the recent issue that came to light with regard to United’s apparent inability to negotiate coverage at some Illinois and Wisconsin hospitals in effect causing employees/retirees to bypass neighborhood hospitals [and associated doctors] and travel more for care than many consider reasonable assuming both health and costs are important. I believe this concern was brought to your attention by Mr. Bruce Beckman President of the Association of Ameritech/SBC Retirees (AASBCR) just prior to Plan introduction in December. I also wonder whether this problem has really been solved or is just part of a larger issue for the company and plan participants. Now that 2006 is here and the plan is active, I have another concern that alarms me. Contrary to AT&T/SBC’s philosophy of my having the ability to control medical costs with the new plan, the facts seem to say otherwise. In fact, it appears that the Plan restricts my ability in some specific areas to effectively control costs that really, I think, can be controlled. Thus, a resultant savings to plan participants and to AT&T/SBC is not achieved. Below is the illustrative example. It pertains to United’s apparent inability to negotiate the best rate with plan doctors for AT&T/SBC and plan participants. Details are:
2005 BC/BS Plan Dr. Not Visit Allowed Allowed $108 $26.13 $ 81.87
2006 United Plan Dr. Not Visit Allowed Allowed $108 $ 11.82 $ 96.18
Please note that both visits are to the same doctor! That tells me that for every doctor visit under this new plan, no matter how often or how little I use the medical plan I would pay $14.31 more per doctor visit than I really need to be paying. The worst part is that plan participants have no control over containing these costs. This control, while implied as being retirees to control, is really under the control of the plan fiduciary that negotiates on their behalf. It isn’t like the Doctor has raised their rate in this example. It is just that the negotiated contract amount that United has with this doctor is higher than what this doctor would be willing to accept under a different negotiated plan arrangement.
Clearly, this seems to be another deficiency with the United Healthcare plan as it is currently defined and negotiated. This leaves me and perhaps other participants with second thoughts about the overall analysis and due diligence of this plan selection over any other plan alternatives. At minimum, it begs some investigation on part of the fiduciary as to whether there needs to be an active review and possible contract tweaking of what retirees are getting for their money. Where is United Healthcare’s measurement to improve plan administration and delivery in this process? Quite honestly, AT&T/SBC has raised my level of attention when it comes to seeking out better quality healthcare at the least cost because as all other plan participants I’m absorbing more of the up-front expenditures until company funding (benefits) kicks in.
Please let me know what can be done to reduce these up-front costs because, as AT&T/SBC has mentioned, it is incumbent on all plan participants to look to minimize healthcare costs for ourselves and our former employer.
Sincerely, Raymond F. Sternot VP-Legislation AASBCR |