USG Slows Rate of Increase in Employee Healthcare Premiums

Tuesday, September 6, 2011

As the cost for healthcare in the U.S. continues to rise, individuals and families have become resigned to the annual hike in the premiums they pay. However, for the coming calendar year, University System of Georgia employees will see the smallest increase – 5.2 percent on average – in a number of years.

As the cost for healthcare in the U.S. continues to rise, individuals and families have become resigned to the annual hike in the premiums they pay. However, for the coming calendar year, University System of Georgia employees will see the smallest increase – 5.2 percent on average – in a number of years.The smaller percentage increase is the result of actions taken in August by the Board of Regents as part of the board’s approval of health insurance plan changes and health and dental plan premiums for the 2012 plan year.

Slowing the rise in health care costs has been the focus of a system-wide committee, the “Total Rewards Steering Committee,” made up of representatives from five USG institutions and the Board of Regents System Office.

“The goal of the committee’s work was to look at a multi-year plan for health care,” said Tom Scheer, associate vice chancellor, Life and Health Benefits for the BOR. “The group focused its efforts around four main themes: educating our employees on living a healthy lifestyle and making good health care choices, providing benefits that provide value at an affordable cost for both the employee and the system, ensuring the system’s plans remain highly competitive and having the data needed to make sound decisions.”

Currently, the University System offers six health care plans:

  • Preferred Provider Organization (PPO)
  • Preferred Provider Organization (PPO) Alternative Network
  • Health Savings Account (HSA) PPO High Deductible Health Plan (HSA/PPO)
  • HSA PPO High Deductible Health Plan Alternative Network (HSA/PPO)
  • Kaiser Permanente HMO
  • BlueChoice HMO

In addition to changes in the premiums for these plans, the regents approved a number of plan changes recommended by the Total Rewards Committee. These changes, effective Jan. 1, are:

• Offer the Open Access Network POS only for the Preferred Provider Option (PPO) and the HSA High Deductible Health Plan.

An open access network is a plan that utilizes a select network of providers who offer their services to covered members at discounted rates.

The BCBS Open Access Network was first offered to University System employees in 2011 and currently 94 percent of the providers in the current traditional network participate in this open access network. Scheer projects that restricting the open access network to the BCBS PPO and HSA High Deductible Health Plan will reduce claims expense by $30 million annually without changing benefit levels.

• Freeze new enrollment in BC/BS and Kaiser HMOs effective Jan. 1.

This change will not affect the current enrollees in the HMOs. However, it will freeze the growth of the HMO’s and allow the Total Rewards Steering Committee additional time to gather data and to evaluate the concept of HMO’s in general and whether HMO’s will be part of the USG’s future healthcare plans.

“This change allows us the time to evaluate the traditional HMO design. They do not offer users an easy way to evaluate costs and assume greater financial control over health care decisions,” said Scheer.

Eliminate the “Consumer Choice Option” plan offering.

This is a plan that allows an employee to nominate a non-provider to opt into the network and accept contracted rates. Today most providers are already participating in the network. This fact is making this option redundant.  The few number of employees enrolled in this option will be contacted and moved into a standard plan.

• Change the Health Savings Account employer funding from “seed” to “match.”

This will require employees to make contributions to the HSA in order to receive a like employer contribution. System matches will be kept at the current levels of $750 for family coverage and $375 for individuals. Employees will continue to be able to make additional contributions up to the federal limits.

• Move the employer/employee share of premiums from 90/10 to 85/15 for the HSA/PPO.

A projected $2.5 million in annual premium costs will shift from the employer to the employee.

• Change the benefit eligibility from 20 hours per week to 30 hours per week for all plans.

Approximately 2 percent of the currently enrolled active participants will be affected by this change. It does not change the eligibility and participation in the current annual leave, sick leave or retirement programs, or affect the type of employee who is currently benefit eligible.

• Establish a benefit start date of the first of the month after enrollment for all plans.

This change will help alleviate the high number of manual retroactive payroll adjustments needed under the current plans. New hires should be able to keep their current private benefits or COBRA until USG health coverage begins.

“The Board of Regents is focused on providing competitive health care plans that provide for our employees and their families while helping to fight the ever-increasing cost of healthcare,” said Scheer.

Members of the Total Rewards Steering Committee were: John Brown, Vice Chancellor for Fiscal Affairs, BOR; Dr. Phaedra Corso, Dept. Head, Health Policy & Management, University of Georgia; Dr. William Custer, Associate Professor, Health Administration, Georgia State University; Dr. Ivan Florentino, Associate Professor, Pediatric Anesthesia Section Chief, Georgia Health Sciences University; Tom Gausvik, Associate VP for HR, University of Georgia; Ronnie Henry, VP for Business & Finance, Darton State College; Lydia Lanier, HR Sr. Managing Director, University of Georgia; Dr. Linda Noble, Associate Vice Chancellor for Faculty Affairs, BOR; Cheryl Johnson-Ransaw, Director of Employee Development and Wellness, Georgia State University; Dorothy Roberts, Systems Benefits Administrator, BOR; Scheer; and Russ Toal, Clinical Associate Professor, College of Public Health, Georgia Southern University.

The Board of Regents Committee on Personnel and Benefits is chaired by Regent Neil Pruitt Jr. and includes Regents Wanda Yancey Rodwell (vice-chair), Larry Ellis, Rutledge Griffin Jr., W. Mansfield Jennings Jr., Doreen Poitevint, Willis Potts Jr. and Kessel Stelling Jr.

Percentage Premium Increase Per Plan for 2012:

  • BCBS PPO  5.2
  • BCBS HSA PPO 5.2
  • BCBS HMO 5.2
  • Kaiser HMO 8.1
  • BOR Dental 0

Premium Increases - Average compared with previous year:

  • 2008   14.2 %
  • 2009    9.8%
  • 2010    8.2%
  • 2011    9.2%
  • 2012    5.2%