Executive Summary

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 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. In recent years, the University has had little influence on these negotiations.

During 1997, Medica announced that its Medica Premier plan would be withdrawn as an option for State employees beginning in 1998.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. In addition, the employee contribution to another popular option, the State Health Plan, rose precipitously, driving many employees to a more restrictive option and causing a disruption in their health care as well. All of this disruption called into question the wisdom of continuing the arrangement with the State.

Issues

The main questions before the Task Force were these:

• Can the concerns of the University faculty and staff be addressed through the State of Minnesota Employee Group Insurance Program?
• If not, should the University find a different way to provide employee health benefits?

The State management, University administration, State employees, and University employees all share the goal of providing high quality health care at a low cost. However, the details of that goal vary considerably among the constituents. The Task Force identified the following issues as apparently of greater concern to University employees than to State employees and management:

• Access to University providers.
• Out-of-area coverage.
• Sabbaticals.
• Early retirees.
• Nonresident dependents.
• Non-managed care option.
• Catastrophic (major medical) option.
• Out-of-network coverage within managed care option (e.g. old SHP model).
• Spousal coverage / cafeteria benefits.
• If both husband and wife have access to health plans through their employers, they should not be forced to each choose a plan but rather should have the option to be covered by one plan of their choice.
• Employees covered by other health insurance should be able to move health benefit dollars to other benefit programs.
• Larger provider network for mental health.
• University contribution to health coverage for retirees.
• Coverage for domestic partners.

Outlook

Because of the amount of time involved in lining up a new set of health benefits options, neither the University nor the State can do much to improve the situation for the 1999 calendar year. The State, through its Joint Labor Management Committee (JLMC) has embarked upon a major study to determine the options to be offered beginning in January 2000. The broad outline of the outcome of this study is expected to be available in July 1998.

In the meantime, the University providers are negotiating with Blue Cross / Blue Shield to become primary care providers in the State Health Plan Select option for 1999. If they succeed, then a major problem will have been partially solved for 1999, but access to University providers will remain in doubt for 2000.

The State has shown a great deal of interest in working more closely with the University on the issues of particular concern to the University community. Two additional University representatives have recently been appointed to the JLMC, bringing additional visibility and voice to University issues. The Task Force has considerable optimism that the year 2000 will bring substantial improvement to the health plans offered by the State.

Recommendations

• The positive developments with the JLMC, the indication that University providers may become part of the State Health Plan Select network, and the shortness of time available all lead to the conclusion that the University should not separate from the State for 1999.
• The Task Force is optimistic that the State will successfully address many of the issues of concern to the University and is particularly encouraged by the addition of two University representatives to the JLMC and by the willingness of the State to address these issues. The Task Force recommends that the University continue to work closely with the State as it puts together its future plans.
• Despite its optimism, the Task Force recommends that the University not commit to remaining with the State for 2000. Instead, the University should pursue two avenues.
1. The University should make the appropriate preparations to be in a position by July 1998 to decide to separate from the State in 2000. These preparations should include further market research, discussions with vendors, and actuarial analysis of the University's demographics and medical usage experience.
2. The results of these preparations may indicate that the University cannot significantly improve its situation by separating from the State. At the same time, the State may not address all of the University issues. The University should explore the possibility of arranging for supplementary insurance to cover some of the needs not met by the State options. This is particularly important to address the needs for out-of-area coverage for faculty on sabbatical and for early retirees.
• While there is considerable optimism that University providers will be represented as a primary care option in 1999, some ambiguity remains about whether they can be in a position to take advantage of developments for 2000. The Task Force urges the University to accelerate the process getting University providers better positioned in the health care marketplace. In particular, the Academic Health Center administration should renew its negotiations with the Buyers Health Care Action Group, which is emerging as a substantial player in the market and is under serious consideration by the State as a health plan option.