Background

In September 1997 a Task Force on Health Insurance was formed by the American Association of University Professors, the Faculty Consultative Committee, and the Senate Committee on Faculty Affairs to study the issues surrounding the loss of Medica Premier as a health benefits option for University employees. The Task Force was divided into two committees. The first committee met intensively early in the fall to study whether there were any solutions to relieve the immediate disruption to employee health care caused by the loss of Medica Premier. The report of that committee was completed in November. The second committee has studied the question of what options are available to the University to address the longer-term issues of employee health care. This document reports the findings of the second committee.

The University of Minnesota has participated in the State of Minnesota Employee Group Insurance Program since 1967. The health plans offered through this program are determined largely through collective bargaining negotiations between State management and the unions representing organized State employees. The State program covers about 60,000 employees, of which about 15,000 are University employees. Although the University is clearly a major component of the State program, it has had relatively little input into the program design.

As long as the employee benefits program at the State produces a selection of health plans which meet the needs of University employees, it is prudent for the University simply to adopt these benefits for its own employees. By combining with the State, the number of employees is roughly quadruple the number at the University alone, resulting in much more bargaining power in the health care marketplace. Furthermore, the State Department of Employee Relations devotes considerable resources to researching and administering the program, costs the University would have to pick up were it to separate from the State.

On the other hand, from time to time radical shifts occur in the plans offered by the State, leading to questions about the wisdom of remaining in a program over which the University has little influence. The 1998 plans brought such a shift; indications are that the year 2000 may bring an even more radical change.

During 1997, Medica announced that its Medica Premier plan would be withdrawn as an option for State employees beginning in 1998. For the 29% of University employees enrolled in this plan for 1997, the withdrawal caused a major disruption in medical care. Another 14% of University employees were enrolled in the State Health Plan in 1997. The employee contribution to this plan rose precipitously in 1998, driving many of these employees to a more restrictive option and causing a disruption in their health care as well.

The Task Force met with representative of the State Department of Employee Relations, with a representative of the Buyer's Health Care Action Group, and with representatives from the Academic Health Center and UCare. The Task Force also set up a Web site where University employees can discuss the issues and problems surrounding health benefits. In addition, a graduate student, Matt Maciejewski, was hired to conduct some research into the current health care market. His report is attached as an appendix.