National Agreement 'reopener' approved by huge margin

Wage increases take effect between now and October 2010

October 6, 2008

The Coalition of Kaiser Permanente Unions and the Kaiser Permanente Partnership Group (the senior leadership team of health plan and physician executives) have approved the 2008 "reopener" of the 2005 National Agreement.

The union vote was overwhelming in favor of the agreement, passing it by a 96% margin.

As part of the 2005 National Agreement, the reopener was directed to focus on across-the-board wage increases and retiree medical benefits for KP's Coalition-represented employees. Improvements took effect as of October 1, and run through the remaining two years of the 2005 National Agreement.

The Common Issues Committee, a group of 44 KP and Union Coalition leaders, made additional agreements on performance improvement and KP growth strategies.

"This agreement is very positive and principled," said John August, executive director of the Union Coalition. "In some tough economic times for everyone, we've shown that workers, managers and physicians can come together, build on our strengths and be a model for health care in our country."

"We're pleased to have successfully concluded this important and challenging work," said Mary Ann Thode, senior vice president, Office of Labor Management Partnership. "With approval of this agreement, we've shown that all parties are very committed to our partnership and have agreed on a package in the best interests of Kaiser Permanente and our members."

The agreement provides a series of wage increases for all Union Coalition employees, to take effect between October 2008 and October 2010. Employees in the Georgia and Mid-Atlantic regions, and in Colorado's SEIU Local 105, will also get improved retiree medical benefits—the first time KP's Georgia employees have had such a plan.

Reopener agreement highlights

Across-the-board wage increases
In California, Colorado and Northwest regions:

3 percent*, effective 10/1/08
3 percent*, effective 10/1/09
2 percent, effective 4/1/10

In Ohio, Georgia and Mid-Atlantic regions:

3 percent*, effective 10/1/08
3 percent*, effective 10/1/09
1 percent, effective 4/1/10

(*4 percent for RNs in all regions except Northern California)

Retiree medical benefits
The agreement introduces a retiree medical benefit program for the first time in the Georgia region and enhances the current retiree medical benefit program in the Mid-Atlantic and Colorado regions.

For eligible employees with 25 years of service, KP will contribute $185 per month towards the cost of HP coverage to the retiree, his or her spouse and eligible dependents. This amount will be adjusted for retirees with less than 25 years of service and will begin when they reach age 65.

Retiree medical benefits in other regions, and for UFCW Local 7 in Colorado, remain unchanged.

Health Reimbursement Accounts
Effective January 1, 2010, a new retiree medical benefit offers all Union Coalition-represented employees an innovative Health Reimbursement Account (HRA). HRAs provide money to reimburse retirees and their dependents for qualified medical expenses, such as premiums, co-pays and prescription drugs.

Employees' HRAs will be funded by employees' banked sick leave, creating multiple "wins." It improves employees' retirement benefits and rewards employees with good attendance. It protects employees' welfare by encouraging the banking of sick leave, ensuring that sick leave is there if needed. A final goal is to improve attendance, thereby improving patient access, service and affordability.

The HRA provides greater cash value for employees' banked sick leave. Currently, banked sick leave is converted to vacation pay and cashed out at 50 percent of value when employees retire. The new benefit will convert unused sick days at 80 percent of value, tax-free, to the retiree's HRA—providing an effective rate of 100 percent or more of the value of the banked sick days.

Joint committee on growth
The agreement establishes a senior leadership group to help shape KP strategy on membership growth, product development, and public policy. The group will include George Halvorson, chairman and CEO of Kaiser Foundation Health Plan and Hospitals; John Cochran, MD, executive director of The Permanente Federation; and John August, executive director of the Union Coalition. The group will jointly craft a charter by October 30.

Performance improvement
All sides agreed that organizational performance is everyone's responsibility and that KP's current Performance Sharing Program (PSP) should be refined to have greater impact. A joint Bargaining Subgroup on Performance, established in August, submitted three recommendations designed to provide better "line of sight" (to engage frontline employees in larger performance-improvement goals that they can directly affect) and to delegate responsibility and rewards to the lowest possible level of the organization. The summary recommendations are to:

  • Establish a national PSP design team to recommend by 2010 fundamental changes to the PSP and provide support and review of regional PSPs.

  • Require each region to evaluate its PSP prior to goal setting in 2009 and 2010.

  • Require each region to implement a demonstration project for 2009 and 2010 to assess the feasibility of new approaches to performance sharing, based on improved "line of sight," jointly established metrics, shared best practices, and greater sense of urgency for change.

These recommendations were accepted as part of the tentative agreement.