The University Record, July 8, 1998

Working group reviewing health insurance options

By Kerry Colligan

Any preference initiative program related to health insurance that might be brought before the Flexible Benefits Committee would not take effect until January 1, 2000.

"Realistically, to get the appropriate input from the faculty and staff before we make any decisions, there is not sufficient time [to see it through properly]," Jackie McClain, executive director of human resources and affirmative action (HR/AA), told the members of the Senate Advisory Committee on University Affairs (SACUA) on June 29. "Any ideas that are generated need to be thoroughly discussed with faculty and staff, to hear what the pros and cons are, and to listen to their suggestions and concerns."

The Health Options 2000 workgroup, which McClain convened earlier this year, was formed as a result of concerns aired when an M-CARE preference initiative was first announced last summer. According to McClain, the workgroup is "looking at what kinds of options might go forward to the flex benefits committee."

There are, she added, three industry-standard models for generating benefits preference. The first model involves limiting the options available; the second is based on unequal employer contributions to different plans; and the third structures benefits such that a greater number of services are available under specific plans.

Of those models, McClain noted that restructuring services is least likely to occur. "We're more likely to be looking at premiums or offerings than the actual design of the benefits themselves."

Regardless, she confirmed that M-CARE remains the focus of the workgroup. McClain pointed out that "It is not uncommon to have the employer offer only one health care option, or to provide financial incentives for the use of their product."

Changes appear to be in the works in two areas. While nothing is in place for 1999 concerning long-term disability and prescription drugs, both are under scrutiny by HR/AA staff. The premiums for long-term disability do not support the 50 percent increase in membership seen over the last two years. A few cases have severely taxed the program, which pays salary and benefits, including mental health. While McClain said she does not favor the removal of a benefit program, she said making long-term disability financially feasible would require either significant increases in premium payments, or a change in the structure of the benefits offered.

During 1998, HRAA has seen a 25 percent increase in payments made for prescription drugs. "There needs to be an education process," McClain explained, "on the value of a prescription. When I pick up a prescription, I know I have a specified amount I have to pay. I don't ever find out what the cost is to the University."

In her opinion, the aging U-M workforce will place additional stress on the benefits program. Yet, McClain acknowledged the need to distribute changes over a number of years. If too many things are undertaken simultaneously, she noted, it can make a significant difference.

"I try to be aware of the effect any changes may have on an individual's pocketbook."