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University committee to examine health insurance costs, Courant tells SACUA

In an effort to cope with the rising costs of health care—a major contributor to U-M's current budget pressure—Provost Paul N. Courant told the Senate Advisory Committee on University Affairs (SACUA) March 24 that the University will seek to trim the cost of providing employee health and prescription drug insurance, while maintaining coverage that offers choice and quality.

Courant said a faculty and staff committee, including benefits experts, will be formed to re-examine the premium and premium-sharing structures of both the medical and prescription drug plans offered by the University. The group will be charged with assessing current trends in premiums and examining the University's cost-sharing structure, which has not been studied seriously in more than 15 years. Courant also said it is likely employees will be asked as early as next year to share more of the cost of their benefits.

The provost said U-M will spend $173 million this year for faculty and staff health care and prescription drug benefits, and he said those costs have doubled since 1998. Over the next two years the University will examine ways to decrease costs while maintaining quality health benefits competitive with its peers.

The University currently pays 94 percent of the overall cost of health insurance, and the current formula results in zero contributions toward premiums by 65-70 percent of covered employees.

"We are facing a serious budget situation and we have to look at all possibilities," Courant told SACUA.

SACUA members met the provost's announcement with understanding. "I think people should pay something for their health care," said Jack Gobetti, professor of dentistry and vice chair of SACUA. "I have been in favor of this for a long time."

Courant said he will assemble the committee before summer and ask members to report back by September. He stressed the committee only will look at the premium structures for health and prescription insurance, not the entire benefits package. Part of the study will include comparisons to the offerings of peer institutions.

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