This summer, the American Federation of State, County and Municipal Employees Locals 3800 and 3801 claimed the University is unfairly benefiting from overestimates of health-care costs at the expense of employees.
In “The University: a boss like any other,” (opinion, Aug. 18) columnist Nick Woomer, without talking to anyone in the administration about U Plan, reiterated AFSCME’s claims, creating further confusion about U Plan among employees. On Sept. 8, the Daily ran a letter to the editor from one of these employees, who again repeated AFSCME’s claims.
The fact is, any reduction of cost in the U Plan is returned to participants, in proportion to their contribution, in the form of reduced rates.
U Plan – the health-care benefit plan for all University employees – is a partnership between the University and its employees. The integrity and fairness of this compact is critical to U Plan’s long-term success. Employees have a voice in U Plan administration, rates and plan design through the Benefits Advisory Committee, which comprises civil service, a bargaining unit, faculty, and professional and administrative employee group representatives.
AFSCME’s rhetoric, notwithstanding the fact that 2005 U Plan cost projections are lower than previously projected, is truly good news for both employees and the University.
A year ago, community medical trends and U Plan experience led the University to expect medical costs to increase approximately 13.5 percent for 2005, on top of the projected 12.6 percent increase in 2004.
We are now relieved to see “only” an 8.5 percent increase on the horizon for 2005. If that projection holds, costs will still increase at a rate significantly higher than that of general inflation, but not as fast as many other employers are experiencing.
Employees benefit from lower health-care costs. As noted above, any reduction in cost – or more accurately, any mitigation in cost increases – in U Plan is shared with employees, in proportion to their contribution to the plan, in the form of lower rates.
In 2005, the University will contribute 90 percent of the premium for individual coverage and 85 percent of the premium for family coverage. Employees will contribute the remaining 10 percent for single, 15 percent for family. The lower trend for 2005 means that, on average, each employee will pay $265 less in premiums in 2005 than he or she would if the medical trend increase had stayed at 13.5 percent.
The University as a whole also benefits from lower health-care costs. Like all employers, the University is facing rapidly increasing health-care costs. In fact, healthcare benefits are one of the University’s main cost drivers.
The University, in partnership with its employees, decided two years ago to create the U Plan and purchase medical coverage separately from the state of Minnesota.
That decision was the right one. U Plan has been a success. Each year, we’ve seen a lower medicalcost trend than we would have experienced had we remained with the state. In fact, since its inception, U Plan has saved the University and its employees more than $13 million in health-care costs through reduced premiums.
It is good news when the University faces lower-than-anticipated costs in U Plan. It means the University has more revenue to dedicate to its core teaching and research mission, and to competitive compensation and benefits for employees, especially important in the face of historic state budget reductions to higher education.
U Plan will continue to evolve. It is critical that employees understand how it works and that its administration is transparent. That is our goal and our commitment.
Dann Chapman is the director of employee benefits at the University. Please send comments to [email protected].
