Union saves $16.5 million in health costs

One of Northern California's largest construction unions saved $16.5 million in health and welfare expenses last year with no cut in benefits.

Operating Engineers Local No. 3 achieved the savings by hiring a team of healthcare professionals to negotiate price breaks and an aggressive campaign to get members to improve their health -- and avoid unnecessary expenses.

The union trust fund behind the program covers 24,000 workers and dependents in California and Utah, including an estimated 3,500 in Greater Sacramento. Operating Engineers represents heavy-equipment operators and construction workers.

Local No. 3 solicited bids for new contracts, renegotiated existing contracts and audited current providers. The end result was a one-time refund of $3.2 million from providers and $13.3 million in annual ongoing savings.

"Reducing the benefits offered was never an option," union business manager and trust fund chair John Bonilla said in a prepared statement. "We just needed to make sure we were getting the best deal for our members."

Lower contract costs in the future means more money for salaries and other benefits, said C. David Kikumoto, president and CEO at Denver Management Advisors Inc. in Greenwood Village, Colo., the company hired to assess the program.

"It will, over time, work its way back to lower costs to employers and workers," Kikumoto said.

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