Fighting the battle of rising healthcare costs has been tough for corporate America. Since 2001, the cost of health insurance has increased by 78 percent. American is fully engaged in this battle and has found some success in containing employee costs, while continuing to offer excellent benefits.
Despite all the economic challenges, the Company has continued to provide one of the best healthcare and benefit packages in the industry. American’s healthcare plans and administrative costs are relatively the same as corporate America during 2007. AA employees’ contributions will cover an average of 15 percent of the overall healthcare costs that the Company will pay in healthcare for 2007.
American’s success in holding the line on employee healthcare benefit costs is in great part due to a combination of smart plan management, proactive efforts and education. The Company offers a number of tools to help employees understand and manage their health needs, such as WebMD, Flexible Savings Accounts, Nurseline, Nurse Advocates and individual health risk assessments.
The Company’s goal is to offer a program that gives employees access to quality healthcare, with treatment available whenever needed, but without overspending. However, in 2007, the cost is expected to exceed $568 million. It is the Company’s goal to continue to work with its employees to find innovative ways to contain costs while maintaining a comprehensive and competitive healthcare benefits program.
As the chart below illustrates, healthcare premiums for AA’s unionized employees are significantly less than employees who work for other large companies. It is worth noting that the variance of these contribution levels by work group is due to the different approaches taken (i.e. wage reductions and work rule changes vs. modified medical plans and premiums) to achieve our restructuring targets in 2003.
Average AA Employee Contributions in 2007
(Percentage of Premium)
Comparison Group |
Indemnity Plans (1) |
POS Plans (3)
|
HMO Plans |
EE Only |
EE + Family |
EE Only |
EE + Family |
EE Only |
EE + Family |
Large Employers |
24% |
29% |
23% |
34% |
23% |
34% |
Transportation/Communication/Utility (2) |
- |
- |
21% |
27% |
19% |
21% |
20,000 or More Employees |
25% |
26% |
23% |
28% |
24% |
29% |
AA—Pilots |
11% |
11% |
18% |
18% |
24% |
24% |
AA—Flight Attendants |
6% |
6% |
11% |
11% |
20% |
20% |
AA—TWU |
11% |
11% |
18% |
18% |
18% |
18% |
AA—AMS |
12% |
20% |
11% |
19% |
- |
- |
Source: Mercer 2007 National Survey of Employer-Sponsored Health Plans.
(1) AA’s Standard Plan – Option 1 was used for benchmarking purposes. AMS is PPO.
(2) A separate benchmark is not available for the Transportation/Communication/Utility industry breakout for all plan types.
(3) Utilized PPO due to data credibility on sample.
Source: AA HR Benefits.
Resources:
Department of Labor Health and Benefits Education
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