By: Richard Dahlkemper
WEBER STATE UNIVERSITYMEDICAL BENEFITS ADVISORY COMMITTEE
SUMMARY OF JANUARY, 2010 STATUS REPORT
The consultants hired by the University to advise administration on health benefits presented a status report on our health insurance plans in early January. Their full Power Point presentation is available if you would like to see it, but here is a summary of their report.
Nationally, health insurance costs have been increasing at an annual rate of 9% to 10%. If our costs increase at the same rate, we can expect premiums to rise by about 16% for the plan year that will start in July and end 18 months from now. Recent trends in Utah have been slightly worse than the national average, indicating inflation of 18.6% over the next 18 months. It is important to understand that price increases are not the only factor in this rise; other very significant contributors are newer and more expensive technology and drugs, low Medicare and Medicaid reimbursement rates which force providers to shift more cost to commercial insurance payers, and increasing utilization from the aging population and workers who are in fear of losing their jobs and health insurance.
For the Weber State health insurance plans there is some relatively good news, but also some serious challenge. The current carriers have proposed premium increases of 9.5% and 11.2%. These are well below the national and statewide trends, but still very substantial. Since the state legislature is unlikely to provide any additional funding to universities for the coming fiscal year, we must consider how we will cope with these cost increases.
The annual deductible and some of the co-payment amounts were increased effective July 1, 2009. These changes significantly slowed the rate of growth in total expenditures for our plans, but we do not have enough data yet to know the long term impact. Over the past 12 months (December, 2008 through November, 2009) claims payments were 99.5% of premiums. This leaves the carriers with essentially no money to cover administrative costs. Over the long run, this claims ratio must be about 89% to make the plans viable. If the changes made last July continue to slow expenditures, that will bode well for us in the long run but, again, there is insufficient data at this point to reduce the trend projections.
So, what should we do? Over the next few months the committee will be considering the following possibilities:
--Change the current coinsurance levels (90%/10%)
–– Change deductible ($600/$1800)
•• May want to consider moving to a Qualified High Deductible Health
Plan (QHDHP) so participants can participate in the tax advantaged
Health Savings Account (HSA) opportunities.
–– Increase coinsurance maximum ($1500/$3000)
–– Add a copay to preventive services (Covered 100%)
–– Change how outpatient services are covered, possibly have the
annual medical deductible apply
–– Change Rx tier structure (20%, 25%, 35%)
--Other measures suggested by faculty or staff members
If you have questions or suggestions please pass them on to me.
Richard J. Dahlkemper, DCHP representative on the Medical Benefits Advisory Committee