Insurance premiums increase for U staff

Erin Ghere

Faculty and staff health insurance premiums will go up substantially as of January 2000, University officials said Thursday.
Insurance premiums for University employees will rise as much as 173 percent because of changes in a state program. The State of Minnesota Employee Group Insurance Program, which the University participates in, has raised prices because its members are using their health insurance more frequently.
“For faculty and staff, the premiums are going to go up quite a bit,” said Robert Fanhorst, acting director of the Office of Human Resources’s employee benefits program.
University officials announced the premium increase at Thursday’s Faculty, Staff and Student Affairs Committee meeting, although employees had been previously notified by mail.
Increases for employees selecting single coverage will range widely, from zero to 173 percent. At the highest increase, employees will pay $45.60 more each month than they did last year.
Premiums for employees selecting family coverage will increase from 23 percent to 128 percent. The highest increase would raise a family’s insurance $119.81 per month more than last year.
The University has about 15,000 employees covered under the state insurance plan. More than half opt for family coverage.
Officials put together a health insurance task force in September 1997 to develop short- and long-term goals for University insurance issues.
“The task force will intensify their look at the advantages and disadvantages of participating in the state health plan,” Fanhorst said.
The University’s other option is to organize their own health care plan. Employees have received insurance through the state health plan since 1967, and the University has had a good relationship with the state, Fanhorst said.
But the high premiums and other problems have prompted the University to evaluate other options. Fanhorst said many University employees have unique health care needs — including sabbatical coverage, domestic partner benefits and early retirees’ insurance. The state cannot provide for all of them.
“We’re very concerned about the increase,” Fanhorst said. “We’re being proactive to find a solution.”
Officials told the Board of Regents that a new plan would be in place by January 2002.
But for now, the University is using their resources to help cushion the blow, Fanhorst said. The University will pay $232.36 of each employee’s health insurance costs beginning in January.
Because employees have a choice between five health insurance plans, the University’s subsidy could render the premium hike moot for some faculty and staff.
The State Health Plan Select is the lowest-cost plan of the five offered, Fanhorst said. With the University’s assistance, employees who choose that plan will not pay anything for the health insurance under the new plan.
On the other hand, the highest-cost plan, State Health Plan, will cost an employee $110.56 each month even with the University’s help.
The three other plans that employees choose from are HealthPartners Classic, HealthPartners Plan and PreferredOne Care Team.
Before the premium hike, the University paid $55 million for employees’ health insurance, with the employees paying an additional $6 million. The University pays the full cost of employee-only coverage and 90 percent of dependent coverage. With the new changes, the University will pick up $67 million of the bill.
The state has given the University four primary reasons for the large hike in health insurance premiums, Fanhorst said.
First, the state has to compensate for rising inflation rates. Second, health insurance participants — including University and other state employees — are utilizing the insurance more often because they are beginning to reach middle age and more have heart problems and diabetes.
Third, premiums for prescription drugs have skyrocketed nearly 15 percent to 18 percent in the past few years. Finally, advances in medical technology are more expensive.
Another major announcement made at the committee meeting was a change in the University’s health insurance options. Currently, University employees have the option of using Medica Primary health insurance, but Medica will be cut in January and PreferredOne Care Team will be offered in its place.

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