Health insurance premiums for University employees jumped substantially Jan. 1, compelling the University to re-evaluate health care coverage for its workers.
Premiums rose as much as 173 percent as a result of changes in the University’s health care program, State of Minnesota Employee Group Insurance. The hike might not be noticeable, but paychecks of University employees will reflect it beginning next week, said Robert Fanhorst, director of employee benefits.
A faculty-staff committee was set up in 1997 to evaluate the University’s relationship with the state insurance program. Task force officials are scheduled to give a report to the Board of Regents in September 2000.
The University helped employees by subsidizing the cost of most health care coverage prior to the increase, but the latest increase will make subsidizing unaffordable.
For single employees, monthly insurance bills jumped by as much as 173 percent. For employees with family coverage, rates climbed as much 128 percent or $119.81 per month above last year’s rates.
“Our department does consider this a big deal,” Fanhorst said, especially since a portion of the employee’s insurance premium is taken out of each paycheck.
The state has given University officials four reasons for the premium increase, according to earlier reports: The state has to compensate for rising inflation costs, the cost of health insurance participants utilizing its services more often, the rising costs of prescription drugs and the higher costs of medical technologies.
The University has about 15,000 employees covered under the state insurance plan; more than half opt for family coverage. On Jan. 1, the University began paying $232.36 of each employee’s health insurance costs.
The state plan offers University employees the choice of five health care options. For employees covered by the lower-cost plans, the premium hike could be rendered moot by the University’s subsidy.
The State Health Plan Select is the lowest-cost plan. Employees who chose that plan will not pay anything for health insurance under the new premiums. But employees who chose the highest-cost plan, the State Health Plan, will pay $110.56 each month, even with the University’s help.
Prior to the cost hike, the University paid $55 million for employee health insurance, with employees picking up an additional $6 million. Beginning this year, the school will pay $67 million.
Rising costs are just one of many problems faced by employees.
The University task force is looking into other options, such as organizing a University-administered health care plan. Some employees favor this idea because it would allow the University to deal with health coverage issues unique to their employees, such as domestic partner benefits, out-of-state coverage and high premiums.
The health care task force recently hired a consulting firm, Buck Consulting, to organize an employee survey and help with committee decisions, Fanhorst said.
The concern with high premiums is not limited to University employees. According to Associated Press reports, Minnesotans’ top health care priority is the cost.
Minnesota’s health care costs remain below the national average, but they have been rising at a faster pace than those in other states during the past few years.

Erin Ghere covers faculty and state government and welcomes comments at [email protected]. She can also be reached at (612) 627-4070 x3217.