Forum: U-M committed to affordable health care

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View a video of the information forum and see an expanded list of frequently asked questions about University benefits strategy >

As national health care costs continue to rise, the University remains committed to nurturing a culture of health.

This was a central theme at a Dec. 1 information forum on the University's benefits strategy, led by Associate Vice President for Human Resources Laurita Thomas and moderated by University Record Executive Editor Laurel Thomas Gnagey. About 60 people attended the session at Palmer Commons and another 300 watched the interactive presentation as it was simulcast live on the Web.

Using a slide presentation, Thomas discussed the current challenge of rising benefit costs, the University's strategy for maintaining market-competitive benefit programs and the planning for adjustments in health care cost sharing that will take effect starting in 2010. She also outlined the University's overall benefits goals and the charges put forth to the Committee on Sustainable Health Benefits and the Committee to Study Retirement Savings Plan Vesting Options for future employees.

While Thomas noted "dramatic health care cost increases" in the last decade that are projected into the future, she said the University remains committed to continue recruiting outstanding faculty and staff, and creating a community of health.

"We have room to change and still be leaders and the best."

The University in September unveiled plans to transition health care cost-sharing plans. The changes under discussion currently by the two committees would take effect beginning in 2010 and may be implemented gradually over two years. Under discussion are plans that involve a shift from the current aggregate ratio of 20 percent employee/retiree contribution and 80 percent University contribution to a 70/30 contribution ratio.

Changes in the retirement savings plan include a vesting and/or waiting period for new hires. No changes to that plan are under discussion for current faculty and staff.

Health care costs at U-M have been rising at a rate averaging about 10 percent annually, slower than the national average of about 12 percent, according to the University's Benefits Stewardship Web site. An analysis comparing U-M to peer institutions in higher education and health care found it to be almost 8 percent more financially efficient than its peers, which has helped the University maintain its lower-than-average rate of increase. Despite the successful efforts to reduce the University rate of increase, Thomas says that the continued rate of growth in heath care costs is not sustainable.

In fiscal year 2007 U-M spent more than $236 million on health coverage, an increase from $90.9 million in 1997. If left unchecked, this expense is projected to exceed $1.5 billion by 2027.

Health market strategies to address the increase include cost-sharing initiatives, value-based insurance design, health and wellness programs and disease management among others, Thomas said. Examples include utilizing University discounts to purchase gym memberships or purchase items at select health food stores. She cited the Uniquely Michigan Web site ( as a source of information.

After the presentation, Thomas answered questions submitted from the audience and via e-mail and instant messages.

Thomas said there are many ways employees can help the University and themselves to save health care costs, including annually reviewing health care plans to choose the most cost-effective option, using generic drugs, sustaining personal health, and when possible utilizing primary care physicians and urgent care instead of emergency rooms.

"If you make healthy choices, it reduces health care costs for all of us," she said.

As for retiree planning, Thomas said several options are available including a retirement preparation course offered through the University, advice through U-M's two retirement vendors and efficient planning to cover a portion of expected health care costs.