|University of Minnesota Health Plan Task Force||January 14, 1998|
|Comparison of Health Insurance Purchasing Alternatives|
|Executive Summary||Introduction||Current Shortcomings||Trends||Alternative Models||Profiles||Retirees||Further Analysis||Summary|
|Appendices: 1, 2, 3, 4, 5, 6, 7, 8||Glossary|
To provide some comparison and context for the Universityís current health plan offerings, a group of seven large employers were asked to share information on their employee health insurance benefits. This group included one local academic institution (Macalaster College), local non-BHCAG employers (Medtronic and Toro), and two Big 10 Universities contacted for this study (Wisconsin and Penn State). The City of St. Paul was also contacted to provide a perspective from an employer that offers only one health plan (or total replacement). Three BHCAG member companies - Carlson Companies Inc., Cargill, and Jostens - were discussed above and are included in the Appendices at the end of the report.
One HealthPartners health plan is offered to Macalaster College faculty and staff. The monthly total premium for single coverage is $156.15 for the 1998 contract year, and the monthly total premium for family coverage is $427.91. The employee contributes nothing for single coverage, and $271.76 per month for family coverage. One interesting feature of Macalasterís health benefit is the freedom that employees have to opt out of the health plan and to receive $50.00 per month in flexible dollars to be spent on other benefits in a cafeteria plan (e.g. flexible spending or dependent care accounts). Employees can also receive these funds as a taxable cash benefit.
This HealthPartners plan has 100% coverage for services sought in- network, and 80% coverage for most services obtained out-of-network. Preventive dental services are the only dental services covered in this plan. The network of mental health providers is quite extensive, and mental health services are covered in an inpatient and outpatient setting. Retirees are not eligible for health benefits of any kind after retirement. Employees on sabbatical are responsible for the full cost of health insurance they obtain to cover medical expenses incurred outside of the Twin Cities. See Appendices 5 and 6 for more comparison information.
Medtronic offers one Medica plan and one Health Partners product to their employees. The monthly total premium for single coverage for Medica is $154, and $463 for family coverage. The employee contributes $39 per month for individual coverage and $116 per month for family coverage for the Medica plan. The total monthly premium for the HealthPartners plan is $123 for an individual and $377 for family coverage. The employee contribution for the Health Partners product is $26 a month for individual coverage and $76 for family coverage.
The Medica plan has deductible for out-of-network individual ($300 a year) and family ($600 a year) coverage. Most of the other services are covered after a small copay. The Health Partners plan has no deductibles for either in-network or out-of-network coverage. Both plans are similar in coverage and only accidental dental coverage is covered in both plan.
Medtronic allows employees who retire before the age of 65 to maintain their health insurance at the same cost as when they were employed. However, after age 65, the employees must pick up Medicare to cover their health care costs. See Appendices 5 and 6 for more comparison information.
Toro employees in the Twin Cities are offered two health plans. The first health plan is offered to all Toro employees in the U.S. and is provided by the Mutual of Omaha Companies. The total and employee out-of-pocket premiums are quite similar in the two plans. The total premium per month for individual coverage in the Mutual of Omaha plan is $123.30, with the employee premium set at $24.66 in 1998. The total family premium is $368.63 with the employee premium set at $73.73 in 1998. The Mutual of Omaha plan has costs for in-network and out-of- network costs. There are no in-network costs for individuals and families, and the rest of the coverage seem to be very generous. The out-of-network deductibles are $250 for individual and $500 for family, with a maximum yearly cost of $1,000 per individual and $3,000 per family. For more specific information see appendix 1 of the Toro booklet for details.
The second health plan for Toro employees is the HealthPartners Choice plan which is a point-of-service HMO product. The total premium per month for single coverage in this plan is $129.11, with an employee premium for $30.47 per month. The total family premium per month is $386.00, with an employee premium set at $91.10 per month. This plan requires co-payments for office visits, emergency care, prescription drugs, and home health care within the HealthPartners network. Out-of- network charges are 80% covered after deductible has been paid. (See appendix 2 of the Toro booklet).
The two health plans are similar in design and cost. The HealthPartners plan is a little more expensive, although it has a wider selection of physicians within the Twin Cities metro area. The Mutual of Omaha plan is carried by all Toro facilities nationwide so has a lower total premium by enrolling a larger number of employees. See Appendices 5 and 6 for more comparison information.
The University of Wisconsin and its affiliate campuses use the same purchasing model as the University of Minnesota. University faculty and staff receive the same health plan options as other state employees, and the State of Wisconsinís Department of Employee Trust Funds negotiates with bidding carriers in every county. The number of health plans available in each county varies from three to eight.
The total premiums for a given health plan are constant across counties, but the employer contribution varies across. Monthly total premiums for single coverage range from $167.58 to $305.28 and total premiums for family coverage range from $421.50 to $752.00. In all counties, the health plan with the lowest total premium requires no employee contribution, but most other plans require some employee contribution. The high premium plan, called Standard Plan, is an indemnity plan administered by Blue Cross Blue Shield of Wisconsin and is available in every county of the state. This plan allows freedom of provider choice anywhere in the world. The health plan with the second highest premium, called Standard Plan II, is also an indemnity plan administered by Blue Cross Blue Shield of Wisconsin and has the same characteristics of the Standard Plan. The total premium in this plan is slightly lower because the deductibles and copayments are higher in the Standard Plan II. All other plans are managed care plans, either PPO or HMO plans with restricted provider networks and less generous out-of- network coverage. All HMO and PPO plans offer uniform benefits, but the indemnity plans have slightly better coverage for out-of-network services. This includes coverage for care of dependents in other states and coverage for care while travelling and on sabbatical.
Outpatient mental health care is covered and up to $1800 per calendar year, and inpatient mental health care is covered up to 30 days or $6300, whichever is less. No dental services are insured by the HMO health plans, but the indemnity plans do offer preventive dental care for children. See Appendices 3 and 4 for more comparison information.
The health plans offered to Penn State faculty and staff vary by geographic region the way health plan offerings vary across the four University of Minnesota campuses. All Penn State employees are offered an indemnity plan called Plan A, a PPO (preferred provider organization) plan called HealthPass, and at least one HMO. In major academic centers like State College, five HMOs compete alongside the PPO and indemnity plans for enrollment.
Penn State has a website (www.ohr.psu.edu/benefits/ttc/health.htm) which provided the data for this discussion. The only premium information available was the employee premium contribution amounts. For single coverage, the employee premium in 1997 for the PPO, indemnity, and HMO plans were $38.00, $52.00, and $8.00, respectively. Total premiums for single coverage in 1997 were $191.14, $220.06, and $123.60 or more depending upon the HMO. For family coverage, the employee premiums were $75.00, $101.00, and $16.00, respectively. The total premium for the three types of plans for family coverage in 1997 was $373.64, $428.28, and $323.49 or more, depending upon the HMO. The indemnity plan - Plan A - has a specific design feature to provide health insurance for faculty travelling or on sabbatical in other states or countries. The PPO and indemnity health plans cover 80% of all medical expenses and freedom of provider choice. Employees are required to satisfy a deductible and pay 20% of remaining charges to contain costs. The HMO plan has complete coverage for services obtained at a participating Primary Care Physician and relies on this gatekeeping mechanism to contain costs.
The City of St. Paul offers only one HealthPartners health plan to all 2900 of its employees, and has been able to keep its premiums fairly low. Total premiums for the HealthPartners plan in the 1998-1999 contract year are 6.5% lower than 1997 premiums. The single coverage monthly total premium will be $178.95 and $458.13 for family coverage. The employee contribution towards the total premium varies by bargaining unit, although the average contribution is close to $68.00. This reduction was obtained by, however, only by changing carriers. Medica was the carrier for the past six years, but lost the contract by offering a bid that was 16% higher than the HealthPartners bid.
Several coverage benefits were improved by switching to HealthPartners, including:
Clearly, the increase in benefits and decrease in employee premiums represents tremendous gains obtained by the total replacement strategy. However, many employees have had to switch providers, or receive coverage at a lower level if they remain with their physicians that are not at one of HealthPartnersí in-network clinics. The addition of coverage for the Extended Network, which is basically a preferred provider organization (PPO), is meant to minimize the employee costs of the change in carriers. It should be noted that the University of Minnesota Physicians are not available to City of St. Paul employees, except in the case of tertiary care. See Appendices 5 and 6 for more comparison information.
|Next Section: Retirees|