Fighting the battle of rising healthcare costs has been tough for corporate America. Since 2001, the cost of health insurance has increased by 83 percent. According to a 2008 Mercer study, a majority of employers with at least 500 employees planned to shift health care costs in 2009 by raising employee contribution percentages or other cost-sharing features. 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. Of the overall healthcare costs the company paid in 2008, AA employees’ contributions covered an average of 14 percent. This annual average is well below large company norms.
Average AA Employee Contributions in 2008
(Percentage of Premium)
| Comparison Group | Indemnity Plans (1) | POS Plans (2) | HMO Plans | |||
|---|---|---|---|---|---|---|
| EE Only | EE + Family | EE Only | EE + Family | EE Only | EE + Family | |
| Large Employers | 24% | 29% | 23% | 30% | 22% | 30% |
| AA—Pilots | 9% | 11% | 17% | 16% | 24% | 24% |
| AA—Flight Attendants | 8% | 8% | 12% | 12% | 22% | 22% |
| AA—TWU | 13% | 13% | 18% | 18% | 17% | 17% |
| AA—AMS | - | - | 13% | 18% | 17% | 17% |
Source: Mercer 2008 National Survey of Employer-Sponsored Health Plans.
(1) AA’s Standard Plan – For Indemnity Plans, a separate benchmark from the 2008 survey is not available due to the small number of employers reporting data on indemnity plans. Therefore, data from the 2007 survey was used.
(2) Utilized PPO due to data credibility on sample.
In 2008, the company’s healthcare costs exceeded $575 million. Healthcare premiums for AA’s unionized employees are significantly less than employees who work for other large companies, as is evident in the chart above. It is worth noting that the variance of contribution levels by workgroup 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.
American’s goal is to work with its employees to find innovative ways to contain costs while maintaining a comprehensive and competitive healthcare benefits program.
Additional Resources: Department of Labor Health and Benefits Education
