Healthcare: Insurance policy challenges
Health insurance is a hot topic in Congress, and that’s not the only place. Each year, campus leaders are confronted by a daunting need to contain costs while providing benefits expected by employees. Annual premiums at higher ed institutions averaged $7,059 for employee-only coverage and $19,584 for family plans in 2016, according to CUPA-HR.
Reported costs for 2017 are expected to be even higher. Preferred provider organizations (PPOs)—in place at 84 percent of colleges and universities—continue to be the most popular choice, according to a CUPA-HR survey.
Over half of respondents’ institutions offer high-deductible health plans (HDHP), 8 percent more than the previous year and a marked change from the 17 percent level reported just eight years ago.
The proliferation of HDHPs is the most significant trend in higher ed health benefits, says Len Spangher, vice president and senior consultant at Sibson Consulting, which provides HR and benefits consulting to corporations and nonprofits.
“Each year we see more institutions making this change, generally for the same ultimate reason of reducing health spend.” Healthcare cost containment involves carefully choosing both the type of plans offered and the mix of benefits within those plans.
Higher ed institutions proceed via one of two paths, depending on their intentions, says Spangher. One approach involves shifting costs to employees by increasing deductibles and by increasing both deductibles and coinsurance payments.
“This is a simple lever that is traditionally pulled every year to reduce institutional costs by making design adjustments,” he says. “It’s just more of the same cost-shifting that most employers have been using for years.” The practice doesn’t address the root problem of rapidly increasing healthcare costs and does not reduce overall health spending, he adds.
Consumer-driven HDHPs present an alternative—taking advantage of consumer shopping tools bringing more information about quality and costs, while also benefitting from wellness programs and tax-advantaged health savings accounts (HSAs).
“This path focuses on reducing plan cost through leading healthier lifestyles, taking care of one’s own chronic conditions and making smarter economic choices through improved knowledge of healthcare quality and cost and tax savings vehicles,” Spangher says.
His firm’s clients view all employee benefits in combination with compensation, thus taking a “total rewards” approach to paying faculty and staff. Colleges are also offering voluntary benefits such as long-term care insurance, vision benefits and options covering specific illnesses. Some institutions combine forces through consortia.
“Our strategy allows us to provide meaningful benefits to our diverse employee needs and to manage institutional costs with the buying power and administration of the consortium,” says Stephen Mease, a spokesman for Champlain College.
The Vermont institution formed the Green Mountain Higher Education Consortium with Middlebury and Saint Michael’s colleges.
The Educators Health consortium is composed of New England institutions, including Emerson College and 11 others that have partnered to manage healthcare plans. Emerson has added an HDHP plan as an alternative to the full PPO plan, says Peter Owens, director of compensation and benefits.
University of Denver campus leaders faced a 15 percent rate increase for fiscal year 2017. To reduce the financial impact, they moved from a co-pay to coinsurance for in- and out-patient hospital services, emergency visits, medications administered during a doctor’s office visit and specialty drugs.
“By taking steps to limit the increase in health plan expenses, the university avoided undue effect on budgets available for compensation and other benefits,” says Lloyd Moore, director of benefits. The university pays at least 85 percent of premium costs.
Rensselaer Polytechnic Institute in New York has adopted a pharmacy coupon program that saves money for employees and the university, says Curtis Powell, vice president for human resources. Also, a mail-order program with Caremark provides 90-day prescription supplies at reduced costs.
Another option is an “RX4Less” program, offered through Capital District Physician Health Plan, in which maintenance medications may be obtained for as little as $1 for a 100-pill supply.
At California State University, Sacramento, the health plan administrator, CalPERS, has implemented a “value-based purchasing design” program for self-funded PPO basic plan offerings. The plan offers savings for patients choosing an ambulatory surgery center rather than a hospital, say Scott Oleinik, benefits manager.
Some changes are initiated not so much by the institution as by plan participants, Oleinik says, adding that more new employees are enrolling in the lower-cost health plans, while existing faculty and staff are switching to them.
Emerson College has taken the self-funding route—moving its medical and dental benefits from fully insured plans purchased from an insurance company to self-insurance. It’s a change Owens says has cut administrative fees. And it has worked well for other institutions.
In 2013, the University System of New Hampshire, for example, announced that it had saved $10 million by moving to self-insured health care. In a hands-on approach, the University of Pittsburgh operates an on-site health and wellness center for faculty and staff.
UPMC [email protected] offers walk-in services—ranging from wellness resources to treatment of common maladies—from qualified health professionals who are supervised by a physician.
“It’s essential to take creative approaches from the perspective of providing convenience, promoting well-being, and lowering the cost of healthcare for our multigenerational workforce,” says Cheryl Johnson, vice chancellor of human resources at Pitt.
At the University of Cincinnati, which added a HDHP/HSA plan in 2014 while retaining a PPO, employee participation hovers at around 40 percent, says Elizabeth Aumann, benefits director. Cincinnati has also offered an employee wellness program since 2015.
“We see great potential in being able to influence our employees’ health and wellness,” Aumann says. On-campus health screenings alerted several employees to undiagnosed health issues, including diabetes and a heart condition. Encouraging and rewarding healthy employee behaviors is critical, says Andy Brantley, president and CEO of CUPA-HR.
“This includes identification and mitigation of health risk factors that lead to serious health problems and increased absenteeism.” While the 2016 CUPA-HR survey found a decrease in the number of colleges offering wellness programs, many institutions are embracing them.
“The landscape for worksite wellness is continuously expanding with new and exciting opportunities,” Rensselaer’s Powell says. “We have begun to offer live and virtual programs, health awareness campaigns, and employee wellness challenges to meet the needs and interests of a diverse workforce.”
Rensselaer’s Life Points program rewards employees for engaging in healthy behaviors. Offerings include personal health assessments, flu vaccines, blood pressure and cholesterol checks, prostate and mammogram screenings, and on-site consultations.
“At a prostate screening, one of our employees received a positive diagnosis,” Powell recalls. “Given the early detection, the employee continues to be a productive member of our work population and when I see him he often thanks me for saving his life.”
Hamilton College in New York also has increased emphasis on wellness, says Karen Leach, vice president for administration and finance.
“We first started educating employees to let them know that the cost of healthcare is directly related to the claims incurred. We encouraged employees to consider the importance of taking steps toward healthier lifestyle choices that could positively impact the overall cost of medical coverage.”
A wellness committee is charged with encouraging physical and mental wellness among employees. The group has organized a sprint triathlon, a 5K event and an annual health fair with over 50 vendors. Lunch-hour speakers address topics ranging from healthy cooking to meditation practices. The college also provides four free health screenings every year along with two flu shot clinics. Hamilton employees have free access to wellness coaching and personal trainers, and massage therapists are available at reduced cost. In addition, employees and their families can take free fitness classes, and flexible schedules let staff participate in fitness activities.
A healthy campus culture
Wellness initiatives combined with carefully designed benefit plans produce positive results, says Spangher.
“Because colleges and universities are their own self-contained communities of employees with cultures that vary uniquely by institution and location, they have the capacity to adapt to systemic change that can more easily be spread over an entire population,” he says.
When an institution truly believes in creating a culture of well-being, that culture can spread perhaps more easily than in a corporate environment.
“The higher education environment offers greater potential to achieve the goals of optimal self-care, healthy living and a healthy workplace,” he says. Campus leaders should consult benchmarking studies on all employee benefits for higher education institutions and look holistically at their own benefits.
“Otherwise these concerns could be missed when benefits are mechanically implemented and maintained,” says Spangher. “They should be properly analyzed to ensure the right amount of coverage is being provided or offered.”
Mark Rowh is a Virginia-based writer who frequently covers HR topics.