The Joint Health Science Benefits Trust (JHSBT) began operations on April 1st 2017 after an extensive negotiation between health employers and health science professionals through their respective bargaining associations, HEABC and HSPBA.
While the concept of creating a joint governance model for the delivery of health and welfare benefits emerged in 2013, the origins of a benefit partnership goes back to 2006 when the parties agreed to a joint funding model for long term disability benefits.
That negotiation saw an agreement that closed the existing HSA sponsored LTD plans (in existence since the late 80’s) and replaced by a 70/30 cost share LTD plan run by health employers through the Healthcare Benefit Trust (HBT). The HSA sponsored LTD plans carried on, but were closed to new entrants. Thus began the first funding partnership between the parties on benefits.
Subsequent negotiations saw health employers continuing to raise the issue of the sustainability of health and welfare benefits, citing annual cost increases well above the rate of inflation. The issue was soon compounded by the severe economic shock with the collapse and fallout of the US subprime mortgage market, putting additional pressure on governments everywhere to control and contain costs.
Those issues came to a head in 2012 with health employers under government direction to hold the line to strict total compensation mandates. Facing an impasse over immediate reductions to the health and welfare plan, the parties agreed to mediate the dispute, and came to an agreement to pursue a different path based on cooperation and shared risk, primarily based on the success of the joint governance model for BC public sector pension plans.
That mediated agreement put the parties on the path to negotiating the first Employee Life and Health Trust (ELHT) in BC through the formation of the JHSBT. Under new federal regulations ELHT’s receive more favourable rules allowing trust sponsors to better manage the delivery of benefit programs to beneficiaries.
These negotiations also produced an important new approach to disability management with the adoption of the Enhanced Disability Management Program (EDMP). This innovative initiative saw the parties agree to a set of principles to improve disability outcomes centered on the early identification and support for ill or injured workers, and improve working conditions, health promotion, and employee wellness throughout the health system. By focusing on early intervention and prevention, the parties sought to achieve a positive impact on disability outcomes, better staff retention, and reduced costs associated with disability claims. Nearly 8 years in, this initiative has proved beneficial for all parties improving awareness and communication and delivering timely support for members facing a possible health disruption to their careers.
The EDMP has a similar joint governance structure as the JHSBT, with equal participation of employer and member representatives, making up a 12 person Provincial Steering Committee (PSC) charged with administering the EDMP in accordance with the HSPBA/HEABC collective agreement, and the policies and procedures developed by the PSC. For further information on the EDMP, please refer to Appendix 10 of the current HSPBA collective agreement.
The Member Premium Component, (MPC) a fund within the JHSBT under the sole direction of HSPBA trustees, arose from the 2006 LTD shared costing model covering HSPBA members.
Like any new disability plan, contribution levels are set well in advance in anticipation of expected future claims, and conservative predictions of expected investment income for the plan. Given the turmoil of markets that arrived shortly after the new LTD plan was created, expected rates of return were in negative territory; and contribution rates were adjusted accordingly.
As markets began to recover, the LTD plan still held a defensive position as it wasn’t clear the full impacts of the financial meltdown and whether the improved conditions were just temporary, or part of a broader trend of recovery from the depths of 2008/09.
As it turned out, a strong recovery was underway and HBT’s investment agent, the BC Investment Management Corporation (BCI), was well positioned to take advantage of improving markets. By late 2012 surpluses were accumulating such that health employers were able to take a contribution holiday. As HSP members were contributing 30% of the cost to the LTD plan, they too had a stake in the accumulating surplus. In mid-2013, HSPBA were notified of a surplus of just over $11 million.
Subsequently, the HSPBA passed a motion that the fund be retained to provide protection for existing health and welfare benefits, or improvements, as the case may be. The funds were held by HBT in a holding account, and labeled the Member Premium Trust Account (MPTA).
The MPTA remained with HBT until mid-2020 while the mechanics were worked out permitting a transfer of the MPTA into the JHSBT. The MPTA was then relabeled the Member Premium Component (MPC) enabling the MPC to participate in the same higher return investment pools as the JHSBT.
The MPC forms part of the JHSBT trust fund and the status of the MPC is disclosed in the notes for the JHSBT annual financial statements, however, these funds are not included under JHSBT net assets for funding benefits, or reflected in any JHSBT surplus accumulation. The current value of the MPC exceeds $12 million.