U-M staff will share health cost In 2004

Friday, September 12, 2003

BY SCOTT ANDERSON
News Business Reporter

In the first step of what could be a three-fold increase in health care costs in coming years, most University of Michigan employees will have to pay monthly premiums in 2004, according to the school.

As faculty members and staffers have returned to work this school year, the university has been detailing the costs for employee health insurance plans. U-M currently pays the full medical benefits for 70 percent of employees and retirees, including anyone with individual coverage.

More than 28,000 employees and nearly 6,000 retirees get health insurance through the university.

Beginning in January, most will pay 5 percent of medical premium costs, with the university paying the balance. Nationwide, health care costs jumped nearly 14 percent in 2003. And if rates continue to rise as expected, U-M workers could pay up to 15 percent of their premium costs in the next two to three years, the university said.

Depending on the plan, active workers and retirees are looking at a monthly individual payment of between .20 and .24 next year.

Employees with two or more dependents also will see increases, depending on their plan.

For example, M-Care HMO – the university’s most popular plan, with 54 percent or 15,300 U-M workers enrolled – had been free for employees and their spouses. It will now cost .02 a month per employee, and another .60 per month for a spouse or a dependent. For a worker with two or more dependents in the HMO, the premium would rise .90 in January, from .74 to .64.

But some workers who had been paying more than 5 percent a month under certain plans will actually see their premiums drop in 2004.

Charging for all health plans has been anticipated for several months. With medical insurance costs rising 17 percent this fiscal year to 4 million, U-M officials in April said the school had to break from its past of covering most health care premiums.

The Committee on Health Insurance Premium Design, formed by Provost Paul Courant, is putting together a report on how U-M should structure its health care formula, and how quickly the university may move to a 15 percent premium cost for employees – a private sector benchmark identified by officials.

“The matter of how quickly we put more premium rates in place really deserves more consideration by our executive officers,” said Barbara Butterfield, U-M’s associate vice president and chief human resources officer.

Courant, who could not be reached Thursday, has said that even with employees paying more, the university’s health care costs will rise about 13 percent in 2004. U-M still expects to pay million more in health care costs because of anticipated double-digit insurance increases in fiscal 2004.

Dr. Charles Koopmann, president of U-M’s Senate Advisory Committee on University Affairs, said it’s too early to gauge a reaction from faculty members represented by the group.

“I fully expect people will become quite vocal as they look at what they might have to pay, depending on what insurance they choose,” said Koopmann, a pediatric ear, nose and throat doctor. “The faculty and staff will have to pay more than they did last year … but not as much as many employees are having to pay in other areas of the country.”

He added that SACUA is particularly concerned about what the price increases will mean to lower-paid employees who are not faculty and staff members. However, U-M plans to give 0 raises to workers earning less than ,000 a year to offset the health care costs.

The university says co-pays for prescription drugs, doctor’s office visits and physical therapy appointments for most faculty and staff will remain largely the same in 2004. However, two unions face increases in their co-pay for prescription drugs. In its new, one-year contract, members of U-M’s Skilled Trades Union saw a co-pay added for some “nonpreferred” prescription drugs. Most drugs will remain at either or co-pays. The prescription co-pays for members of the American Federation of State, County and Municipal Employees went from and , depending on the drug, to and , according to the U-M Human Resources Department.

“People consider it a pay decrease,” said Donald Pacheco, vice president of the Skilled Trades Union, which represents 493 U-M workers. “Not only did the premiums go up for a lot of our people, but also all our co-pays went up.”

Members of the All-Campus Labor Council, which includes representatives from all university unions, plan to meet Thursday to discuss the health benefit increases.

U-M’s open enrollment for employees to choose a health care plan runs from Oct. 1 to Oct. 24.

Scott Anderson can be reached at sanderson@annarbornews.com or at (734) 994-6843.

Note: Dear Mr. Anderson,
I wanted to correct a small inaccuracy in your article on the rising health care costs for workers at the University of Michigan (“UM staff will share health cost,” 9/12/03). Last January, the University also imposed higher prescription drug costs on members of the Graduate Employees’ Organization — the union representing Graduate Student Instructors and Graduate Student Staff Assistants. GEO strongly believes that this unilateral benefit change is illegal, and has pursued a grievance to that effect through official channels. A hearing on the Unfair Labor Practice claim was held in August. If you have any more questions, please feel free to contact me by email or at 734.998.1321.