Health plan stretches
to cover rising costs
By Elizabeth Kiem
U.Va. employees braced for the third consecutive year of stagnant
salaries, news that they will be charged more for monthly health
insurance has met with some concern. But while the freeze on salaries
reflects a state budget crisis, the benefits situation mirrors
a national trend.
is not alone in experiencing higher prices for hospital fees and
prescription drugs and for increased consumer use of those services
and medicines. Last year, average premiums for employer-provided
health care rose anywhere from 13 to 27 percent, according to
employees of the commonwealth but not U.Va. Employees
that spike translated to an increase in 2003 premiums to $33 per
month for individuals and $272 per month for families.
contrast, U.Va., the only state agency with an independent health
plan, set monthly premiums for 2003 at $17 for individuals and
$206 for families. The benefits included in the plan have been
amended slightly but are still rated above the states premier
Key Advantage Plan by actuaries and consultants.
pay less and get more," said Linda Way-Smith, director of
employee benefits. "I would stack our health plan against
just about anyone."
total projected cost of covering 24,000 University employees and
dependents under the plan will be $79 million in 2003. With a
self-insured plan, administrators can only fund the claims through
the premiums collected. Although the projected cost is 16 percent
higher than the previous year, employee contributions were raised
just 5 percent, totaling about $13.5 million. The remainder of
the increase will be absorbed by the University.
have a benefit pool where we collect expenses and then allocate
them among the institutional units. Its up to each paying
unit to come up with additional benefit charges, said Yoke
San Reynolds, vice president for finance.
U.VA. EMPLOYEE PREMIUMS/MONTH
+ 1 $108
Prior authorization required before covering any durable
medical equipment. Diabetic supplies still covered by Prescription
A small number of prescription drugs have been moved between
tiers 2 & 3.
co-payments for mental health visits are limited to eight,
after which visits will carry $10 co-payment.
obtain Option 1 benefits for specialist visits, you must
obtain the referral from your PCP prior to treatment.
cards for the discount vision plan will be sent to policyholders.
Concordia is the new administrator for dental claims.
addition, plan developers found ways to reroute cost savings from
changes in the policies to ensure wide coverage with minimal premium
tried to do whatever we could to keep the plan as secure as it
is and keep the cost for people as low as possible, said
costs will be most apparent for hospital services at the level
called Option 1, which now requires copayments of $100 for inpatient
and $50 for outpatient or ambulatory care. Also, certain drugs
have been upgraded to a higher copayment bracket. The University
will continue adjusting the drug formulary just once a year.
changes will save the University money without drawing on the
wallets of the insured. Adopting the national Private Healthcare
Systems network for the Approximately 500 retired employees
and out-of-state dependents ensures maximum coverage at a big
savings, said Way-Smith. Another alteration is to reduce the number
of free mental health visits to eight, after which a $10 copayment
will be levied. With the average course of treatment running Just
six visits, the change will not affect most users.
administrators also found that some policyholders have bypassed
standards on referrals for specialists, draining additional funds
from the plan, a tactic that is barred under the new guidelines.
we close some of these loopholes, were able to keep the
benefits as rich. By keeping the plan more true to its original
intent were able to save several million dollars that can
be spent on reducing peoples premiums, said Way-Smith.
expect 2004 will bring a comparable increase in health costs (15
percent). Leonard W. Sandridge Jr., executive vice president and
chief operating officer, has already warned of the impact of keeping
premiums artificially low, saying there is a delicate balance
between deferring fees now and imposing large increases later.
Financial officers say that if U.Va. Employees continue to use
health care at a rising rate, premiums may have to be adjusted
by more than 5 percent next year.
said the University had committed all the reserves in the benefit
pool (about $1.2 million) to help cover next years anticipated
$65 million shortfall, but that creative budgeting on the part
of each paying unit will still be necessary.
Were using up all the reserves we have at this point.
So this is something we can only do this one year, she said.
because the state subsidizes the employer contributions of U.Va.s
plan according to its own rates, higher premiums for state employees
in the future could help keep University workers insurance
we say were increasing the employer portion, part of that
is paid by the state, said Reynolds. The more they
raise premiums in July, the larger the subsidy for us.
a slender silver lining on the great gray state budget cloud.