(UNTITLED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-04718A001000100005-6
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 9, 2016
• Document Release Date: June 1, 2001
• Sequence Number: 5
• Content Type: OUTLINE

,Approved For Release 2001/08/07 : CIA-RDP78-04718AO01000100005-6
PART Ir
DISCUSSION.
a. Noting: that there exists in the commercial market beneficial l
coverige for permanent and total di.sasbility, as well as various
and sundry plans for individual purchase in temporary disability;
that FECA is excellent coverage for either permanent or temporary
disability occurring in performance of duty; that CSRA is poor
coverage for an agency the personnel of which is young, outside
of performance of duty; - the Agency is properly concerned to offer
its employees the benefit of g2M r s for temporary disability that
includes family protection. 'This coverage is found in a hospitaliza-
tion and surgical plan.
It is possible to buy practically anything in this field - at a
price. The problem is - what coverage features should we offer and
how far should they go.
(1)
The latter brings to mind the importance of the principle of
co-insurance, as to catastrophic or low-incidence excessive
costs where-in given features are covered up to a normal or
average-circumstances extent and from that point on the
insurer carries the larger burden with the individual sharing
a part of it. The philosophy is roughly that of automobile
collision insurance with a $50.00 or $100.00 deductible clause.
a. The Agency's offer of two largely non-comparable hospital and
surgical plans to its employees is failure to meet its proper
personnel responsibility. It is rolling with whatever an outsider
has to offer. It fails to utilize Agency strength to get a one
best plan which defers to operational' and security circumsta s,.
Emd to the facts of illnesses.
d. O ha's original grievously inadequate plan - in effect until
I Sept. '53 - and improved somewhat then, is a sad reflection on
us. `heir improved plan is some better, but not nearly enough so.
(1)
Then to offer GKI, - by and large poorer than Omaha overseas -
in this heavily overseas business is to aompciaud our error.
This is particularly so in light of Omaha's flexibility i,e.
camplete willingness to tailor a plan, and its 100% security.
(Oma a will accept Agency certification of circumstance and
pay to n?yne to whcm and how we designate.) The Agency also
forgot that this rigid association - GEl prevents us from
gaining the advantage of our own experience (presumably
better); hence in our premium rates we carry poorer risks
than we, and deprive ourselves of downward adjustment as
deserved.
lM11111~1!
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 Approved For Release 2001/08/07 : CIA-RDP78-04718A001000100005-6
e. It is suggested that the 0maha experience is statistically suffi-
cient to provide a critical basis for assessing our coverage needs.
Accordingly these general conditions seem indicative.
(1) The incidence of actual cost hits heaviest in the surgical
field (1+1%), Hospital board end room is next (32%) and hospi-
tal extras are seen not to occupy as great importance as often
thought (27%).
(2) Pregnancy and complications therefrom, stand out with heavy
incidence. 1.2~ of the employees' total actual costs are in
this one field.
(3) Hospitalization coverage beyond 15 days is for the last 50 of
incidence, but the insurance company knows its premium rate
carries no real burden when coverage extends from 15 to 31 days.
(Experience identical under GHI).
(14) The same observation, - as in (3) above obtains in respect to
surgery. Total actual costs are almost entirely below $300. -
(97%). One can cover the unusual, even beyond actual incidence.
for no real premium burden.
(5) Equally so - as in (3) and (4) above, the picture of total
hospital Extras cost conforms. 96% are covered in a plan
embracing, up to $150-
(6) ndeminificatiof return of premiums paid at 50% under the pre-
sent Omaha plan is woefully insufficient. Omaba admits it.
(7) Indeminification return of actual costs to the employee at 67%
is not enough.
(8) Omaha admits that its surgical coverage with 141% indemnifi-
cation on actual costs is poor.
f. GHI's attitude is that of doing us a favor. When
(Task Force member and.Chief, Insurance and Claims Branch, -
ployee Services Division, Office of Personnel), approached them
ience the
for some modest statistics concerning our own exper
response was: "If you require this kind of information, it might
be better for you to take your business elsewhere." Also they
refused us and a balance sheet.
GHi's balance sheet and Operating Statement reveal a reserve ac-
cumulation that might be warrantable in a catastrophic-coverage
situation - which they don't have. Liabilities under their plan
are predictable, by and large; the premium rates, producing a 12%
25X1A9a
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 Approved For Release 2001/0 ;IA-RDP78-047l8A001000100005-6
gross profit in. 1952, and a ratio of assets to liabilities of 25X1 C
nearly 2 to 1 seem out-of-line with true risk assumed.
i. GHI'a plan means that we will never know. where we stand - experience
versus premiums and never get the benefit of our experience if it
proves better than others. Omaha offers to do this.
GHI'a inter-plan feature (wide-spread Blue-Cross tie-in) is countered
by Omaha's willingness to continue coverage for the terminated
individual at a non-group rate without medical examination or
statement of health, - as long as he wishes - or until he acquires
membership in a, new group plan. (The non-group premium is 20%
higher.)
k. With the differing benefits of Omaha and GHI, overseas versus
domestic, the employee is pulled about in his attempt to secure
adequate coverage. This is highly unsatisfactory.
1. The 3 types of contract offered by Omaha show these premium dif-
ferentials -
(i)
(2)
(3)
Individual contract premium
Individual and spouse contract
premium
Individual, spouse and children
contract premium
$1.60 (monthly)
$4.75 (monthly)
$6.00 (monthly)
GHI combines the 2nd and. 3rd groups above into a single premium
rate which means that 758 #2s are carrying part of the cost for
1615 f3s. Perhaps the #1 rate contains a out of this burden also.
The youth of our Agency (2/3 under 35 Years of age) suggests that
the single individual plus individual and spouse help carry, in
premium rates, some of the family contract burden.
7ECRUZ
Approved For Release 2001/08/07 : CIA-RDP78-04718AO01000100005-6
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