Tech outlines benefit changes
HOUGHTON – Many changes have already been made to employee benefits packages at Michigan Technological University, but many more changes lie ahead, including likely becoming the only university in the nation to offer only a high deductible health care plan.
Tech Vice President for Administration Ellen Horsch and Benefits Director Renee Hiller gave a detailed presentation on health care from calendar year 2012 (which is how health care is measured, as opposed to fiscal year), legislation changes and Tech’s three-year health and wellness roadmap during a Wednesday special meeting of the University Senate in R.L. Smith Building (ME-EM) Room 111.
“Each day that goes by, each week that goes by, each month that goes by is extremely important in trying to figure out what we want to do for next year,” Horsch said. “The more data, the more experience we can gather, the better we can make a decision as to what direction we want to go.
“… One of the things the Senate asked is how are you guys making these decisions? Why are we constantly changing? We’re not doing it because we like to change, we’re doing it in some cases because we have to to stay within budget, some cases legislation changes.”
Tech’s net health care costs reached a peak of $15.86 million, adjusted for inflation, in 2008, largely due to an unusually large number of high claims. In 2009, the number dropped to $13.18 million, but has steadily risen each year since to $15.48 million in 2012. Now, by switching from Aetna to Blue Cross Blue Shield as its insurance vendor, costs are projected to drop to $14.5 million in 2013.
Horsch and Hiller detailed a cost-share analysis showing Tech paid $15,301 per contract through the HuskyCare Preferred Provider Organization plan, but only $8,909 for HuskyCare High Deductible Health Plan. The employee cost share was $3,977 and $2,012 for the plans, respectively.
In 2012, 564 employees opted for the PPO, while 596 went with the HDHP; 96 were dual spouse and 94 opted out. In 2013 the enrollment options show 661 benefit-eligible employees going with the HDHP and only 448 on the PPO, with 86 being dual spouse and 118 opting out.
The presentation then detailed the following cost drivers affecting Michigan Tech, compared to benchmark institutions: a higher number of dependents covered, the remote location/geographic reality and lower employee premium. Factors helping to control costs include smart purchasing decisions of when to seek health care, generally healthy employees and positive employee health behaviors.
All the above factors were shown in comparison to 12 benchmark universities, the labor market, Fortune 500 companies and small businesses, over both calendar years 2011 and 2012, data compiled by health care consulting firm AON Hewitt. The full chart is included in a PDF of Horsch and Hiller’s presentation linked on the Senate website, www.admin.mtu.edu/usenate/.
Now, as mandated through the Affordable Care Act, Tech must pay at least 60 percent, but according to Michigan’s Publicly Funded Health Insurance Contribution Act, it cannot pay more than 80 percent of total annual costs.
“We’re looking at that window there,” Hiller said. “It must be affordable to the employee. … We’re still working through a lot of details on this. We try to look at it as quickly as we can, but it’s very complicated. We’re still working through that with AON consulting.”
Also, effective Jan. 1, 2014, through the ACA, Tech must offer health care to at least 95 percent of full-time employees, which is measured at 30 hours per week, or face a $2,000 per-employee penalty. For most Tech faculty and staff it won’t be an issue, but student employees, particularly on internships, could face problems.
Despite an ever-changing legislative environment, Tech still has a tentative roadmap in place, which includes eliminating the PPO plan in 2014 and continuing with the HDHP, with possible incentive-based Health Savings Account funding based on group/individual performance in 2013. The 2014 university budget target is set at $15.5 million, up from the projected $14.5 million this year.
Senator Mike Mullins asked how many other universities in the U.S. only have a high deductible plan. Horsch said she didn’t know of any, to which Mullins said, “We’re trendsetters in the wrong way.”
Tech President Glenn Mroz said just because nobody else is doing it doesn’t mean Tech shouldn’t and many factors go into the decision. Horsch said conversations are ongoing.
“We debated whether we should put out there only (the HDHP), and that is our plan. It doesn’t mean as more information comes in we may learn something,” Horsch said. “What we’re finding is both the employee and the employer is saving money.”
Horsch emphasized that a lot could change, but that she wanted to present to the Senate early in the year instead of October like in 2012.
“That to us was the purpose of coming here,” she said. “We know you’re not happy with a lot of these changes. In some cases we have to do it. … The guidelines are changing all the time. … We try to be competitive. In some cases we are, in some cases we aren’t.”
More responses to the changes are detailed in a related article in today’s Daily Mining Gazette about a fringe benefits survey conducted at Tech.
In addition to the presentation slides from the Senate website, more details can be found about Tech benefits at mtu.edu/hr/benefits/overview.