LOS ANGELES — Bitter disputes over health and pension payments to union members have created plenty of drama in states and cities this year. But do not look for a movie about it — Hollywood will be too busy dealing with a labor crisis of its own.þþAfter three relatively peaceful years, the entertainment industry is bracing for a showdown next spring. At issue is an enormous projected shortfall in financing for some of the most jealously guarded perks in show business, the heavily gilded health and pension plans.þþNo one is talking of a strike yet. In fact, no one with official standing is talking publicly. Leaders of the industry’s craft and blue-collar unions and officials of the Alliance of Motion Picture and Television Producers, which represents the studios and other production companies, have all declined to discuss what will happen when several contracts expire July 31.þþBut in town hall meetings over the last two months, union leaders have told members that weak industry economics, a tough investment climate and, above all, sharp increases in health care outlays are expected to create a $500 million shortfall by 2015.þþ“We’re going to be asking for money, lots of it,” Matthew Loeb, the president of the International Alliance of Theatrical Stage Employees (I.A.T.S.E.), told a gathering at the union’s Local 80 here in late September. His union represents about 50,000 set designers, makeup artists, grips and other film workers.þþTo put things in perspective, the contract that in 2008 settled a three-month strike by Hollywood’s writers was estimated to include total pay and benefits increases of less than a third that amount over three years. A subsequent, hard-fought three-year deal with the Screen Actors Guild, with about 120,000 members, cost the companies only about $250 million. One person involved with the pension and health plans, who spoke on condition of anonymity because of the delicacy of the situation, called the looming half-billion dollar shortfall “staggering.”þþThe workers represented under the stage employees’ contracts have been known more for making deals than picking fights. In years past, the union might have been at the bargaining table a year before the contract deadline; this time talks may not start until spring. The last full-blown craft strikes occurred more than a half-century ago, and involved a different configuration of unions; Hollywood’s Teamsters, the other major union headed for a 2012 showdown, have not staged a major strike since 1988.þþBut the current situation is volatile, partly because the Teamsters and some allied unions who share health and pension plans with I.A.T.S.E. aligned the expiration of their contracts with those of the larger theatrical workers alliance by shortening their last contract cycle to two years.þþThis time, those unions are expected to bargain jointly on health and pension issues. A walkout would instantly stop film and television production in the Los Angeles area, and would affect production in New York and elsewhere, because editors, camera crews and some others are represented on a national basis.þþHollywood’s guilds largely resolved their health and pension problems, at least for now, in several agreements over the last year or two. But the craft workers and other film laborers got caught in a whipsaw that involved the financial markets, changes to federal health care law, and some features that are peculiar to the financing and benefit structure of their plans.þþIn some ways, Hollywood’s blue-collar health plans are more generous than those covering actors, writers and directors, who are usually regarded as being higher in the pecking order.þþAt the gathering in September at Local 80, John Garner, a health care consultant with Levey, Garner & Isaacs, told I.A.T.S.E. members their plans matched or exceeded those of the guilds and others in deductibles, office visit co-pays, member contributions and other measures.þþþOne chart showed that entertainment industry workers pay just $300 as a median per person deductible for services from a preferred provider group. But those in the plan covering craft workers and Teamsters pay no deductible for the same services.þþSuch generous coverage has come at a cost. The craft workers contribute their residuals payments from the rebroadcast of films on television and elsewhere to their benefits plans, while guild members typically receive the residuals as cash. At the same time, the blue-collar workers for years have been draining an enormous cash reserve in their own plans — once enough to finance 30 months of benefits — to meet outlays that have increased as the population has aged and more sophisticated medicine has raised costs.þþBut what advisers had said was a surplus in the reserve is almost spent. Investments never quite recovered from the market collapse of 2008. Hollywood’s residuals payments flattened as the DVD boom ended. Meanwhile, federal health care legislation required plans to cover children to the age of 26, and eliminated lifetime coverage maximums.þþIt added up to what David Wescoe, the executive administrative director for the health and pension plans for the craft and blue-collar unions, told union members was “a very dicey picture for the next three-year cycle.”þþSpeaking at Local 80, he put the pension financing shortage at $190 million. Increased health expenses, he said, would require an additional $180 million to stay even with current benefits. About $75 million would be needed to keep the reserves at a safe level of six to eight months. And falling contributions, if industry economics remain soft, will also hurt.þþTo some extent, the size of the shortfall may be affected by the decisions of the Supreme Court, which will hear oral arguments on a challenge to the federal health care plan in March. “It’s in their hands,” read the legend of a photo of the justices in Mr. Wescoe’s presentation in September.þþBut even if the court were to overturn the new law, something must give when the companies and unions meet. “To leave it the way it is today, we need half a billion dollars,” Mr. Loeb said.þ
Source: NY Times
