ELCA Council Hears Reforms for Church Health-Care Funding

CHICAGO (ELCA) -- "The perception that the costs are high is fairly accurate," John G. Kapanke told the Church Council of the Evangelical Lutheran Church in America (ELCA). Kapanke, president of the ELCA Board of Pensions, Minneapolis, gave an interim report on the Board's efforts to reform the costs of health-care coverage for almost 50,000 ELCA pastors and employees.
The council met here Nov. 12-14. It functions as the ELCA's board of directors and serves as the legislative authority of the church between churchwide assemblies. Assemblies are held every other year; the next is Aug. 8-14, 2001, in Indianapolis.
Kapanke told the council that costs of health-care coverage for the church are higher than national averages. Members of the ELCA health plan have an average age of 49, while the average age of a worker in the United States is 39. "When you administer a health plan, that's a huge difference," he said. "We do not discriminate based on age."
Contributions to the health plan are based on the salary or defined compensation of an employee, Kapanke explained. The ELCA operates under a "sharing" concept that uses contributions from congregations where salaries are high to "subsidize" the contributions of congregations where salaries are low.
That same "sharing" concept has a geographic effect, because the same compensation rate is used across the church, said Kapanke. Congregations where health costs are low "subsidize" the contributions of congregations where health costs are high.
"Quite a number of congregations are concerned about the cost of the plan. There is the perception that the cost is high, and the concept of sharing is misunderstood," said Kapanke. The Board is afraid that many subsidizing congregations will abandon the plan, leaving other congregations unable to afford health coverage.
Higher costs to some congregations may be magnified by poor communication of how contributions to the Board of Pensions are used, said Kapanke. In addition to the church's health plan, the Board administers the ELCA's pension, disability and survivor benefits plans.
The Board is developing changes that will more clearly describe which contributions are funding the health plan and which contributions are financing an employee's other benefits, said Kapanke. He said 15 cents of every dollar contributed goes toward other plans and "enrollment and billing."
Another proposal would sort the ELCA's 11,000 congregations into as many as eight "geographic rate classes." The contributions a congregation makes to the health plan will more closely relate to regional health-care costs, said Kapanke.
Under the "sharing" approach some ELCA congregations contribute 175 percent of the actual cost of health-care coverage, while others contribute 65 percent of actual costs. With the changes being developed (and still employing the concept of sharing), Kapanke said the goal is that almost all ELCA congregations will contribute within 25 percent of their average cost of health-care coverage in their area.
In the past year, representatives from the ELCA Board of Pensions met with each of the church's 65 synod bishops. "We've had a lot of feedback, and the process continues," said Kapanke. A second round of visits will be paid early in 2000, and each bishop will receive a complete description of how proposed changes would affect individual congregations, he said.
Kapanke said the proposed reforms may not require any constitutional change, which would need Church Council approval, but the council's feedback and affirmation would be essential before the Board's trustees proceed. If the proposals are implemented, he said they would go into effect on Jan. 1, 2001, and be phased in over three to four years.
With the proposed changes, Kapanke said the ELCA's smallest congregations may see an increase in their contribution rates, but they will still be contributing well below the average cost of health-care coverage in their area. The church's largest congregations -- with more than 1,500 baptized members -- may see the largest drop in contribution rates to bring them more in line with the average cost of coverage.
While predicting that contribution rates would go down generally in more rural synods, such as the ELCA's Arkansas-Oklahoma Synod, Caribbean Synod, East-Central Synod of Wisconsin and Southwestern Minnesota Synod, Kapanke warned that higher contributions can be expected in more urban settings, such as the ELCA's Metropolitan Chicago Synod and Metropolitan New York Synod.
The ELCA central offices are in Chicago and the higher contribution rate would have a significant impact on the churchwide budget, said the Rev. Robert N. Bacher, ELCA executive for administration. He said the church may need to budget an additional $1 million dollars for employee health plans in 2001. "This may be the appropriate thing to do," he added.
Admitting that the health coverage of employees in the churchwide offices has been subsidized by ELCA congregations, ELCA Treasurer Richard L. McAuliffe said, "This (proposal) is fairer than what we are currently doing."

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