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Tech Senate hears update on benefits

October 11, 2012
By STEPHEN ANDERSON - DMG writer (sanderson@mininggazette.com) , The Daily Mining Gazette

HOUGHTON - With health care costs rising quickly, Michigan Technological University is looking into major changes in its benefits offerings, and the University Senate heard a presentation about "Benefit Changes for 2013 and Beyond" at its regular meeting Wednesday.

Vice President for Administration Ellen Horsch, Vice President for Research Dave Reed and Benefits Director Renee Hiller gave the presentation, and all 32 slides can be found on the Senate website, admin.mtu.edu/usenate.

The presentation looked at the role of the Benefit Liaison Group, an advisory group which looks into fringe benefit program options; a three-year health and wellness roadmap; a look at the current state of health care and health care changes for calendar year 2013 (health care runs on a calendar year; the university's fiscal year is July 1-June 30).

Article Photos

Stephen Anderson/Daily Mining Gazette
Michigan Technological University Vice President for Administration Ellen Horsch addresses the University Senate Wednesday during a presentation about upcoming health benefit changes.

"We want to emphasize prevention and effective health management. Obviously we want to prevent any kind of wasteful health care spending," Horsch said during her presentation. "It's also important to remember that we need a plan that's flexible - not everyone lives in Houghton, not everyone needs care just in Houghton."

She emphasized the philosophy of the BLG is to share responsibility on cost containment/reduction between the university, employees and the community.

The university is currently self-insured, meaning it takes on the role of primary risk taker, but it also maintains more flexibility in plan design and saves an estimated $2.5 million over the fully-insured option. The insurance provider, currently Aetna, still processes the claims.

But a large reason for the vendor change was due to rising costs unrelated to large cases, which is typically the reason for significant cost fluctuations.

"This year the difference does not appear to be due to large cases. This variability is due to a different factor," Reed said. "There was a change on Jan. 1 in our health care costs, a systematic increase in the neighborhood of 17 or 19 percent.

"The actual fringe rate we realized in fiscal year 2012 was 40 percent. Projecting for the current fiscal year we will hit $16.1 million in realized cost, $1.6 million more than budgeted for."

Reed presented a side-by-side comparison with other educational and government organizations and noted that Tech is currently "quite a bit higher than the benchmarks" - to the tune of $2,281 per enrollee.

An analysis of key cost drivers include the higher number of dependents covered on Tech plans, Tech's remote location (health care costs are consistently higher in rural areas), and lower employee cost share.

"The big outlier is dependent coverage," Reed said. "The number of dependents we cover is much higher and contributes $2,247 per person."

Hiller noted that there are a "lot of moving parts," and the university is currently under a tight time frame to secure a vendor. After receiving vendor responses to a request for proposals, potential vendors will present to the BLG later this week, and a decision is expected early next week.

"As we normally do every year, we'll have open enrollment forums to provide information on the plans themselves. The first is on Oct. 24," Hiller said.

The full schedule can be found in the presentation slides, but it includes eight open enrollment forums before the end of November.

Many questions were asked and answered throughout the presentation, and a list of frequently asked questions will be updated on the benefits website (www.admin.mtu.edu/hro/benefits/index.shtml).

"Why is the burden of the projected $1.5 million increase in health care costs for 2013 being placed on the employees as opposed to cutting the university budget by the same amount?" was one of the questions asked.

Reed responded: "To the extent we might realize savings in a change in vendors then those costs will not land on the employees or the university."

Senator and Associate Professor of Archaeology Timothy Scarlett noted that if projected costs are lower, there's no way there will be an increase in benefits, and he made the case several times during the meeting for better benefits options.

"It's a balancing act between direct compensation of salary and benefits," Michigan Tech President Glenn Mroz said in response.

 
 

 

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