By Dan Heuchert

In introducing this year’s changes to the U.Va. Health Plan, the University’s top human resource officer said the insurance program is a good example of the benefits of decentralization.

In 1995, the state gave U.Va. permission to split from the statewide employee health insurance program and form its own self-insurance program — a precursor to the chartered university legislation that is soon to come before the General Assembly. Since then, U.Va.’s insurance plans have consistently rated higher than the state’s plans, said Thomas E. Gausvik, chief human resource officer.

In updating U.Va.’s plan each year, “the first thing we look at is what the state is doing —that’s a guidepost,” Gausvik said. “We try to have a situation where our plan is better than the state plan.”

Even with the latest round of premium increases — either roughly 7.5 percent or 18 percent, depending on which of the two plans employees are enrolled in — U.Va.’s employee premiums remain comparable with the state plan, and the benefits are richer, Gausvik said.

Leaving the state plan “has been good for our employees,” said Leonard W. Sandridge, executive vice president and chief operating officer. “With our own plan, we have been able to provide better coverage at the same or lower cost to employees than the state plan.”

Among the differences: the state does not offer enhanced dental coverage, and it has discontinued the “double-state” discount for family coverage that it once had offered to families in which both parents are state employees. The University offers both. Also, state co-payments for office visits, hospital stays and prescription drugs are higher across the board than the University plan. U.Va. offers two plans, which are being renamed this year to make them more understandable. The “direct access” plan, which will now be known as the “low premium” plan, allows employees to pay smaller monthly premiums, but requires that they pick up a greater share of the cost of utilization — usually 20 percent of the bill.

Only 4 percent of the health plan’s 11,425 enrollees opted for that plan in the past year. “If you’re really healthy and don’t anticipate having a lot of costs, then the low-premium plan could save you money,” Gausvik said.

In the “point of service” plan — soon to be known as the “high premium” plan — employees pay higher premiums, but lower out-of-pocket costs for using health services. The remaining 96 percent of employees are covered under this plan.

Employees using both plans will see a few changes, effective Jan. 1. The “employee + one” coverage is being split into two separate categories, “employee + child” and “employee + spouse.” Premiums for the “employee + child” category will be lower, because pediatric care is generally less expensive than adult care, said Linda Way-Smith, director of faculty and staff benefits. In the high-premium program, the monthly premium for “employee + child” coverage will be $124, compared to $130 for “employee + spouse.” In the low-premium program, the charges are $72 and $75, respectively.

“We tried to do some things to help single parents,” Gausvik said.
Also new this year are distinct categories for dental and orthodontic benefits, with separate $1,000 maximum payouts. Previously, getting braces for a child could quickly exhaust the $1,000 dental limit, meaning that employees would have to pay all subsequent dental care charges for the year out of pocket. (The $1,000 dental maximum is renewed annually; the new $1,000 orthodontic limit is a lifetime maximum.)

Finally, participants in both plans will see higher co-payments for prescription drugs. Employees will pay the first $9 for generic drugs, up a dollar from last year; the first $18 for drugs on the formulary list, up $2 from last year; and the first $36 for nonformulary drugs, up from $32 last year.

Office-visit co-payments will remain the same.

The high-premium plan also is undergoing some changes. Participants will no longer need to obtain a referral from their primary care physician to see a specialist; however, for the first time, participants will pay a 10 percent coinsurance charge, in addition to their co-payment, up to a maximum of $2,500 annually per person covered.

Introducing the coinsurance charge will not be popular, Gausvik acknowledged, but it was essential to the plan’s financial health. “That was necessary from the standpoint of trying to maintain benefits for the maximum of employees,” Gasvik said.

Removing the gatekeeper, splitting the employee + one coverage and creating a separate orthodontic benefit “are all very positive things aimed at addressing concerns that have been raised,” Gausvik said. “Where we can afford to make those changes, we’ve done that.”

The premium increases, approximately 7.5 percent for the low-premium program and 18 percent for the high-premium program, reflect several factors, Gausvik said, adding that the University’s share of the premiums will increase by 22 percent. (Overall, the employer pays approximately 81 percent of the total premiums, Way-Smith said.)

Utilization is increasing; the health plan is currently paying out $1.3 million a week in claims, he said. On one hand, the University’s workforce is getting older. On the other, 250 new people who do not pay additional premiums, mostly infants, were added to the plan, which covers approximately 23,500 employees and family members. Overall enrollment also has grown.

The cost of medical technology continues to rise, as do drug costs. More and more people are being prescribed preventive and maintenance medications, Gausvik said.

More can be done on the preventive side of the equation, he added. “One of the things we are going to study over the next 12, 18 [or] 24 months is: What are the things we do with wellness programs and prevention [and] how can we improve the lifestyles of the participants?”

For instance, increasing the subsidy for memberships at Intramural and Recreational Sports could lead to reducing the risk factors for diabetes and heart disease over the long term, Gausvik said.