Film and TV writers soon will be seeing $7 million less in union health benefits over each of the next three years. The cost-cutting measure, which was part of the WGA’s new contract, is designed to keep its ailing health plan solvent.

As part of the deal, the companies agreed to increase their contributions to the health plan by $30 million annually, and the WGA agreed to institute $7 million in savings each year. Without the changes, the plan was facing a $40 million annual deficit by 2019.

Beginning in January, deductibles and co-pays for non-generic drugs will be going up, and payments for out-of-network services will be going down.

“These decisions were guided by the following principles,” WGA West leaders said today in a letter to their members. “First, all of us should bear some part of the cost of the changes, as is the case with the deductibles. Second, and perhaps most fundamentally, our health fund’s costs for out-of-network doctors and mental health providers have increased greatly and must be controlled. In essence, we are saying to all of us, as participants, that we can continue to see any provider that we choose, because choice is important to writers, but we can no longer afford to subsidize to such an extent providers who decline to join our network.”

WGA health plan

Currently, before the health fund starts paying benefits, the participant pays an annual deductible of $300 per person up to a maximum of $900 per family. Starting in January, these deductibles will go up to $400 per person and a maximum of $1,200 per family.

Not all of the cost savings will come out of writers’ pockets, however — if they stay in-network. But their out-of-pocket costs will be going up dramatically if they seek out-of-network services. Currently, the fund pays 70% of the cost for out-of-network services after the deductible is met, and if the participant reaches $2,500 in out-of-pocket expenditures in a calendar year, the fund then pays 100%.

Starting in January, however, the plan will pay only 60% of these out-of-network costs up to an annual out-of-pocket maximum of $20,000, and 100% thereafter. There will be no changes to the 85% the fund pays for in-network care or the in-network out of pocket maximum of $1,000.

“Our fund has an extremely large group of in-network providers, including 92% of doctors nationwide and the top hospitals,” the guild leaders said. “We are protecting this robust network and its lower cost to the Fund by creating a greater incentive to use in-network services.”

And to incentivize the use of generic drugs, the guild leaders said, “We are modestly increasing the costs of brand-name drugs at both the pharmacy and by Express Scripts mail order. Generic drug costs will remain unchanged.”

They added: “Even with these changes, and despite the national crisis over health care inflation, our health fund is still the best plan in the entertainment industry and one of the very best in the country. We intend to keep it that way. The company contribution increases coupled with the plan changes we are making should put us back in the black for the duration of this minimum basic agreement and, we hope, beyond. The guild will continue to seek other ways to save money so as to maintain our current benefit levels. For example, just recently the fund concluded a deal for prescription drugs that will save an additional $16 million over the next three years, with no changes in benefits.”

The letter was signed by WGA West president Howard Rodman; vice president (and future president) David Goodman; secretary-treasurer Aaron Mendelsohn, and executive director David Young.