December 2005 Friday Focus
The October 5, 2005, issue of Friday Focus was devoted to various healthcare issues facing Missouri State University. In it, I discussed the topics of a comprehensive wellness program, options for employees' contributions to healthcare plans, and healthcare coverage for retirees.
I received many responses to this particular Friday Focus. The responses were usually thoughtful and often detailed with specific questions and comments. I appreciate very much the responses I received because they demonstrated this institution's capacity for discussing and dealing constructively with serious issues.
Many responses posed similar questions or contained similar comments; therefore, I decided to devote this Friday Focus to a follow-up on healthcare issues, concentrating on responses and clarifications to some of the most commonly expressed questions or concerns.
In addition, because of the interest and timeliness of this topic, I am announcing that I will hold two institutional town meetings to continue the discussion of the University's healthcare plans and policies. The first town meeting will be from 2-3:30 p.m. Friday, December 9, in the Theater in Plaster Student Union. The second meeting will be held in January at a date to be announced soon. All faculty, staff, and students are invited.
Answers to Frequently Asked Questions in Response to the October 5, 2005, Friday Focus
Question: Does participation in wellness activities require that they be done on campus only?
Response: The University recognizes that participation in wellness activities can not be done only on campus by all employees. There are not enough facilities to accommodate all the employees, nor would it be reasonable to expect all exercise to occur on campus. Therefore, the University's wellness program will acknowledge that wellness activities, regardless of where or when employees participate, is the goal of the program – not that they occur on campus.
Question: Does the University have sufficient exercise facilities to support a wellness program?
Response: The on-campus exercise facilities available to students, faculty, and staff are sub-par, and we are taking action to address this. The Student Recreation Center Task Force is currently evaluating the feasibility of developing a student recreation center on the Springfield campus. Last year, the students voted to use $75,000 of Wyrick fee monies to hire a consultant to perform a feasibility analysis on campus. At this time, we are considering two options - constructing a new recreation center and renovating existing facilities to better serve this purpose. A consultant has recently been selected; you will be hearing more about this process in the near future. For other campuses, agreements to allow students, faculty, and staff to use non-University exercise facilities will be pursued.
Question: Are there employee discounts at non-University fitness centers?
Response: Employees of Missouri State University may receive a membership discount at St. John's Fitness Center, Cox's Meyer Fitness Center, YMCA, Chesterfield, and Doling Family Center fitness centers.
Question: Will employees be penalized for not participating in the University's wellness program?
Response: The intention of wellness programs is to encourage employees to choose healthy behaviors and promote wellness. The University's new wellness program will provide incentives for employees who participate, as well as a varied menu of activities from which employees select wellness activities appropriate to themselves. Regardless of the incentives used, employees will have a choice. There will be sufficient options in the wellness program that all employees will be able to participate in the program and qualify for the incentives if they choose to do so. Employees who choose not to participate may pay a greater amount for insurance benefits, either as a higher deductible and/or insurance premiums.
Question: Why are employees not currently allowed to decline University insurance?
Response: The University has been advised by several of our faculty with expertise in group insurance matters, as well as independent benefit consultants, that we should not allow employees to "opt out" of the University's medical insurance plan for three reasons:
- Employees are not required to pay a premium for their individual coverage; therefore, the cost of coverage is not a reason for "opting out."
- Allowing employees to "opt out" will reduce the number of covered lives in the plan with the potential that the more healthy employees will "opt out" leaving less healthy employees to be insured. This runs counter to the philosophy of group insurance. A reduction in insurance plan members could result in a reduction in funds contributed by the University for health insurance. Fewer dollars to pay for medical expenses of employees who are potentially more likely to need healthcare creates the possibility that funding the insurance plan will become much more costly to the University. While we don't know how many employees might elect to "opt out" if allowed to do so, even three or four dozen might reduce funding in excess of $200,000 annually at the University's current contribution rate of $368.97 per employee per month.
- Disallowing "opt-outs" prevents plan "hopping" which results when a person switches from plan to plan to gain a financial advantage or to gain coverage for a condition or treatment not covered by the plan he/she has. The possibility exists that an employee who "opts out" of our insurance because he/she has coverage elsewhere is subsequently diagnosed with a serious medical condition which is not sufficiently covered by the other insurance and the employee asks to be re-enrolled in the University's plan. The problem with this possibility is that the University would incur a financial obligation for medical expenses that weren't accounted for when contributions were made for employee health insurance coverage.
Question: Do recent changes to the prescription drug benefit prohibit physicians from prescribing brand name drugs when generic alternatives are available?
Response: Recent changes in the prescription drug benefit do not prohibit physicians from prescribing brand name drugs when generic alternatives are available. Physicians may prescribe brand name drugs. The changes in the prescription drug benefit were intended to encourage employees to purchase generics when filling a prescription, but their physician determines whether the generic is appropriate for the employee. If the physician writes on the prescription form that only the brand name version of the medication is appropriate for the patient, then our insurance plan will allow the prescription to be filled with the brand name without the payment of an additional or higher co-pay.
Question: Do physicians at Taylor Health and Wellness Center have admitting privileges at St. John's?
Response: Physicians at Taylor Health & Wellness Center can admit patients to St. John's using the "direct admit" procedure. This procedure requires that the Taylor physician call a St. John's physician within the medical specialty involved in the patient's diagnosis and explain the patient's medical condition and reason for recommending hospital admission. The St. John's physician can directly admit the patient to the hospital without an appointment with the St. John's physician.
Question: Is offering a self-insured medical plan the best option for the University?
Response: Periodically over the past 8-10 years, the University has considered options other than the current self-insured plan option. The University has always engaged qualified benefits consultants to assist in the evaluation of these other options. In every instance, the conclusion of the consultants has been that a self-insured plan is the best option for at least two reasons:
- As a self-insured plan, the University, not an insurance company, determines what benefits and services are covered. This autonomy is a significant advantage to employees and the University when offering group health insurance benefits. As an example, the University's insurance plan can be (and has been) modified to include services that are recommended by employees. It can also exclude or restrict services that are being abused or are no longer appropriate for coverage, thus reducing medical expenses and costs.
- Generally, the assumption behind this question is that the University would be better off if it were part of a larger insurance plan, such as Blue Cross/Blue Shield, or the Missouri Consolidated Healthcare Plan (i.e., known as the state health insurance plan). It is assumed that we would simply add our "covered lives" to those already covered by the insurance company and we'd get lower rates and better coverage because we would be included among tens of thousands of lives insured by the company. However, that is not how group health insurance is sold. Because we have approximately 4,000 people under our plan, the insurance market considers our medical claims experience as credible and would rate us based on our actual medical claims experience, not that of the tens of thousands of people in their plan. Therefore, the insurance company would set our premiums based upon our expected medical costs as well as their need to make a profit. Another consideration with purchasing insurance is that the premiums offered in the first year tend to be lower in order to win the contract. Subsequent renewals most likely will be higher, if our medical expenses are higher than anticipated by the insurance company. A renewal quote may involve a 40-50% premium increase, depending on medical expenses for the group. This reality often results in employers switching insurance plans every couple of years to avoid significant premium increases, with employees suffering the disruption of changing physicians and hospitals each time the plan changes.
When the University last bid its health insurance plan in July 2002, companies like Aetna, Blue Cross/Blue Shield, Cigna, Humana, and Principal declined to bid. The few companies who did quote offered premiums that ranged between 14% and 60% higher than the University's premiums as a self-insured plan.
With respect to the Missouri Consolidated Healthcare Plan, (commonly known as the state health insurance plan), the University maintains regular contact with the administrators of this plan. Remember that as employees of a state university, we are not considered "state employees" by the Missouri Consolidated Healthcare Plan. Instead, we are considered "public employees," and the premiums for public employees are significantly higher than those for state employees. In 2004, the last year for which we have premium rates from the state plan, the following were the monthly premium rates for the state healthcare plan for public employees as compared to the University's premiums:
| Coverage | Missouri State University | State of Missouri Plan |
|---|---|---|
| Employee only | $295.53 | $485.80 |
| Employee + Spouse | $260.56 | $1,095.38 |
| Employee + Child(ren) | $260.56 | $795.21 |
| Employee + Family | $260.56 | $1,409.40 |
In reviewing these 2004 premiums, it is clear that the cost to the University for joining the state healthcare plan would be significant – about an additional $4.6 million per year.
Question: Would the University not be better off by participating in a healthcare consortium with other Missouri colleges and universities?
Response: For many years, a number of Missouri public colleges and universities participated in a consortium for providing group health insurance to their employees. Missouri State University was a member of that Consortium until 1987. However, the University determined that the premiums we were paying for health insurance were subsidizing the healthcare costs of employees at the other institutions; our employees had lower medical expenses year after year. The University left the Consortium and in 1988, with the assistance of an employee benefits consulting firm, implemented the current self-insured employee group health insurance plan. Since our separation from the Consortium, we have monitored the Consortium plan; our premiums have consistently been lower than those charged in the Consortium.
In early 2004, several member colleges in the Consortium determined that they would be better off if they left the Consortium. The result was that the Consortium disbanded at the end of 2004. The option of the University banding together with other state universities to provide healthcare insurance for employees has been tried and is clearly not to our advantage.
Question: Does the fact that the University's insurance plan requires one premium rate for family coverage disadvantage employees who need to cover just a spouse or one child?
Response: In the past, the premium structure for our group health insurance has been reviewed by the Fringe Benefits Committee and the Healthcare Plans Review Committee. Both committees support the current premium structure based upon claims data available then. Since it has been several years since a study of family medical expenses has been done, it seems timely that we review the most recent data to determine if offering one premium rate for family coverage is still appropriate and justified on the basis of actual medical expenses of different size family units.
Question: Isn't the cost for participating in the Weight Watchers at Work program on campus unaffordable for some employees?
Response: The University recognizes the value of having an on-campus Weight Watchers at Work program, not only for the participating employee's personal benefit, but also as a means to reduce potential future healthcare costs for the individual and the University community. The University also recognizes that for some employees the $120 registration fee is cost-prohibitive. For these reasons, the University recently approved a proposal to reimburse employees who successfully complete the 10-week program (defined as attending at least 8 of the 10 meetings) for a portion of the registration fee. The University will reimburse employees $75 of the $120 registration fee up to a maximum of three times during a calendar year. The net cost to the employee with the reimbursement is $45 per session.
Question: Why is the University considering eliminating healthcare coverage for retirees and won't this step put the institution at a disadvantage for recruiting faculty and staff?
Response: The University has never paid for healthcare insurance for retirees. It has, however, allowed retirees to purchase insurance through the self-insured plan. Year after year, the University's premiums vs. claims paid data indicates that retirees do not cover their costs. What the University is proposing is that it eliminate the option for retiree insurance purchase by future employees hired after a certain date because of the mounting deficit in the retiree pool that the individual premiums for current employees are forced to subsidize.
An ever-increasing number of institutions and other businesses are discontinuing their health benefits for retirees for the simple reason that they cannot afford them. No one is predicting that this trend will reverse itself, so the University should not be competitively disadvantaged by such a policy.
Again, thank you for the thoughtful input on these most challenging issues. Because of your responses, we have succeeded in creating a meaningful campus conversation on these topics. I look forward to our discussions at the two town meetings, which will help us move toward some decisions for future healthcare coverage for Missouri State employees and retirees.