The U.S. Department of Labor recently announced a grant of more than $1.2 million to assist some 246 Rhode Island workers who were displaced by layoffs at the Brooks Eckerd corporate offices in Warwick. The layoffs are due to acquisition of Brooks Eckerd by Rite Aid.
The total grant is $1,224,099, of which $685,497 is to be released immediately under the National Emergency Grant program.
“This $1.2 million grant will provide these Rhode Island workers with skills training and other employment services to help them find and succeed in new jobs,” said U.S. Secretary of Labor Elaine L. Chao.
The grant is formally awarded to the Rhode Island Department of Labor and Training to provide workers with a full array of employment services, including assessment, career advice, occupational skills training and basic skills development.
On June 5, 2007 Brooks Eckerd announced layoffs beginning in August 2007. The layoffs are expected to continue through May 2008. The change comes as the new ownership changes Eckerd Pharmacies over to the Rite-Aid brand.
Brooks Eckerd Pharmacy was created when Jean Coutu purchased the Eckerd Drugstore chain from J.C. Penney and merged it with Brooks Pharmacy, a regional chain. The company was a unit of the Quebec-based Jean Coutu Group, however, the Brooks Eckerd corporate headquarters was located in Warwick, Rhode Island.
On August 23, 2006, the Wall Street Journal announced that Rite Aid would buy Brooks Eckerd for $3.4 billion. The deal closed on June 4, 2007. One day later, the company announced plans to relocate the corporate office in the merger.
Rite Aid Corporation is one of the nation’s leading drugstore chains. With the acquisition of Brooks Eckerd, the company has annual revenues of more than $27 billion. Rite Aid now has more than 5,000 stores in 31 states and the District of Columbia, with a strong presence on both the East and West coasts. The stores employ about 116,000 people. Rite Aid is the largest drugstore chain on the East Coast and the third largest drugstore chain in the U.S. The company is publicly traded on the New York Stock Exchange under the ticker RAD.
According to company sources, all of the acquired Brooks Eckerd stores will be renamed Rite Aid and carry Rite Aid products and services. Integration of the more than 1,850 acquired stores is expected to be completed over 16 months.
According to the U.S. Department of Labor, National Emergency Grants (NEG) are discretionary awards by the Secretary of Labor. The grants temporarily expand service capacity at the state and local levels through time-limited funding assistance in response to “significant dislocation events.” When a layoff, plant closing or other event creates a need beyond what the state can reasonably be expected to meet, the state may apply for an Emergency Grant. In order for a state to qualify, any discretionary funds available at the state level must be included in the state’s resources.
Grants are given for different purposes. Disaster grants benefit areas afflicted by floods, wildfires, blizzards, hurricanes, earthquakes and other natural disasters. Other grants include Trade-WIA Dual Enrollment grants and Trade-Health Coverage Infrastructure grants.
Regular NEG grants may be available when a single or multiple company layoff affects 50 or more workers. NEG grants are also appropriate when layoffs are industry-wide within a region, or when small or rural communities are severely affected by layoffs of fewer than 50 people.
A number of resources are available to inform the state and local employment agencies of the policies that govern grant awards. Communities are urged to initiate the grant process early, to ensure that funds are available when needed.
Mental and physical health insurance coverage limits will remain equal until the end of 2007 thanks to an important law’s extension signed by the President. The more-than 150 million workers in the U.S. covered by group health insurance packages are affected.
The extension involves Rhode Island employee benefit plans. The law is called the Mental Health Parity Act (MHPA). Before it was originally signed into existence in 1996, health insurance plans could legally have large discrepancies in their coverage limits for physical or mental health treatments. For example, physical health treatment coverage limits might be $100,000 yearly, but mental health limits could be one-tenth or even one-twentieth of that. Such discrepancies are no longer legal.
The original bill included what is called a “sunset clause.” That means the bill had an automatic expiration date. In this case, it was September 31 of 2001. Five amendments since then have assured its continuance beyond the “sunset” date.
The federal enforcement agency is the Employee Benefits Security Administration (EBSA). It was created in 1974 for the sole purpose of enforcing pension issues through the Employee Retirement Income Security Act, or ERISA. Since its inception, it has gone through a number of name changes. In 1986, it became the Pension and Welfare Benefits Administration (PWBA). Then in 2003, it became a sub-cabinet level agency overseen by an Assistant Labor Secretary. Its new mandate includes dealing equally with violations of health care laws and pension laws.
Mental health treatments covered typically include stays in either the mental health wing of a medical hospital or a mental hospital, or psychiatric center for ailments like depression, post-traumatic stress disorder, or schizophrenia; time in a rehabilitation facility (“rehab”) for treatment of drug or alcohol dependency issues; and visits to psychologists, licensed therapists, or psychiatrists.
The new expiration date of the Mental Health Parity Act is December 31, 2007.
So, will all these different ideas ever become a reality in Rhode Island and will you employers ever feel some relief from the ever increasing costs of health care insurance? Well, according to my experts in the state of Rhode Island, these proposals are on the way to becoming the law of the land as we speak. That would put Rhode Island up with Massachusetts as states that have actively pursued reforms that will change the way that employers handle their health care benefits responsibilities.
In the case of the plan coming from the health insurance commission—which by the way is called the WellCare plan—that could be online and useable by employers by the start or the middle of this coming fall. Some predict the start date sometime in October.
The other plan in the works, the one coming out of the House Finance Committee from its Chairman Costantino, was slated to begin working as early as this July. But the insurance companies and the law makers have not completely workers out all of the details about how these new health insurance policies will work (with all of the benefits becoming optional and some services and provider networks being shrunk), so don’t expect insurance companies to start offering trimmed down, cheaper insurance plans until this coming January 1, 2008, say my sources.
And remember, with Costantino, the plans are all optional on the part of the insurance companies, so even though they could offer these cheaper insurance plans, your insurance company does not necessary have to start offering them right away, or at all. They could wait and see what happens to other insurance companies that offer these programs.
Either way, word from employers and their reps in the state is that they are excited about them. As many as three out of four members of the Chamber of Commerce in the state’s major city, Providence, suggested that they might start giving health insurance to their employees because of these plans.
Now, you might be asking yourself, Rhode Island employers: those lower health care insurance costs are all fine and dandy, but how will all of this be paid for? After all, my employees with still be using health care services at the rate that they do now. They will still have the same chronic health conditions, as will their spouses and their children. And the doctors surely are not going to lower their prices. All good points (if you are indeed making them).
But the plans put out in Rhode Island have answers for some, if not all, of those questions. For instance, to keep down the costs of chronic conditions on your health care budget, the Koller plan is looking to prevent those chronic conditions altogether by implementing wellness programs. These are the kinds of programs that employers can set up in house or with an outside gym or fitness center to encourage employers to quit smoking, to lose weight, or to eat healthier.
The bill coming out the House, on the other hand, would look to save employers money by making their options more flexible. This includes allowing health care insurers to cover basically a lot of options if they want to, whereas now many of these options are made mandatory under the law. Take, for instance, birth control bills, hearing aids, infertility treatments, cancer screenings—these are all forced upon insurers to cover by the law. Under the Costantino bill, they no longer would be mandatory.
But the Costantino bill does require that insurers provide coverage still for hospital stays, for diagnostic tests, surgeries, emergencies, accidents, and office visits, as well as pharmacy benefits of course. The bill also allows insurers to keep costs down for employers by limiting the scope of the provider networks, and setting maximum deductibles for individuals as $2000 and families at $4000.
By rough definition in the state of Rhode Island, the small business is the employers that has fewer than 50 employers working on its books. And it is just those employers that the state health commissioner, Christopher F. Koller, is looking to rescue from the throes of the health care coverage crisis.
Koller’s plan would specifically try to help employers who are at risk for losing their employer sponsored health care plans altogether because of the rising costs of health care. What his plan would do make sure that the health care insurance premiums do not rise more than 10 percent of the Rhode Island’s employee’s average salary. That means that the Rhode Island health care insurance premium for a single employee would not be allowed to be more than $314 per month.
Then as I mentioned there is another proposal coming as a legislative bill from the state House Finance Committee, particularly the Chairman of the committee, Steven M. Costantino. Costantino’s plan is to put the limit at 7.5 percent of the average worker’s salary, instead of that 10 percent. That would come out to a health insurance premium of $240 per month for an individual.
The overall costs of a health care insurance policy under this plan would come to $3000 per year for an individual, and $7200 per year for a family, which in both cases comes out to about half of the overall costs that employers in the state are paying at the moment. That would hopefully, according to my sources, encourage more employers to provide health care that already do not provide it.
So in other words, that $240 per month or $314 per month is not the rate paid by just the employees. That would be the employer’s total cost of a premium, and then if they wanted to pass along some of that to their employees afterward, it would be up to them.