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Navigating Health Care Cost Trends at Purdue University

Learn about the impact of rising health care costs nationally and at Purdue University in 2011. Explore strategies, challenges, and program changes to manage health care expenses efficiently and maintain quality care for employees.

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Navigating Health Care Cost Trends at Purdue University

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  1. 2011 Purdue Health Plans Senate Presentation October 7, 2010

  2. Health Care Trends • Nationally, health care costs are expected to rise 8% or more. [www.indystar.com/article/201009300245/business03/9300428] • Nationally, workers are expected to pay average premiums of $2,209 in 2011. This is an increase of 12.4%. • Indiana employers are seeing premium increases of 10-13%. • Nationally, the average premiums that employers pay on behalf of each worker expected to rise nearly 9% to $7,612. • Employers are replacing co-pays with coinsurance for all services including prescriptions, office visits, and urgent care. • Major consulting firms expect costs to rise by 9% for 2011 after a 9.5% increase this year. Other state schools are making adjustments to benefits • One state school’s deductible increased 50% on their PPO plan. Coinsurance percent rose from 25% to 30%. Prescription drug deductible and insurance increased along with the maximum out-of-pocket on prescriptions increasing from $1,000 to $1,500.

  3. Purdue Strategies to Manage Health Care Costs • Health Plan Advisory Committee Discussions • Strategies shared under consideration but not yet implemented: • Spousal surcharge if the spouse had access to other employer provided coverage • Surcharge for smokers • Charging for the number of dependent children covered • 30-day waiting period for benefit eligibility • Merging the Purdue Incentive and Co-Pay Plans with corresponding plan changes • Incentives and disincentives for participation in health improvement programs • Multiple salary tiers for setting employee premiums • Possible new networks and programs through providers like Clarian, American Health Network, etc. • Blue Ribbon Healthcare Committee • Established to recommend short-term and long-term changes to achieve both immediate and longer-term cost containment • Feasibility of an on-site pharmacy/medical clinic • Benefit plan design, including plan design strategies • Health improvement programs for Purdue faculty, staff, and families

  4. Blue Ribbon Healthcare Committee Charge: Focus on health care containment for the long term while continuing to provide high quality care to Purdue employees and eligible dependents. • Pam Aaltonen, Nursing (Chair) • Steve Abel, Pharmacy Practice • John Beelke, Human Resources-Staff Benefits • Bart Collins, Health Communications • Mike Campion, Management • Jenny Coddington, Nursing; North Central Nursing Clinics • Jim Dworkin, Regional Representative, North Central • Joan Fulton, University Senate – Chair (Agricultural Economics) • Luis Lewin, Human Resources • Carol Sternberger, Nursing; Regional Representative, Ft. Wayne • Philip Troped, Health & Kinesiology • Susan White, Pharmacy • David Williams, Senate: Faculty Affairs Chair (Med Illust/Vet Med) • Steve Witz, Regenstrief Center Recommendations Due by March 1, 2011

  5. Current Programs • All Purdue medical plans are self-insured and administered by CIGNA. There are 3 options: • Purdue Choice Fund is a consumer-driven health plan. Enrollment:1,023 employees • Incentive PPOplan is a preferred provider plan. Enrollment: 4,201 employees • Co-Pay plan is a plan with HMO benefits featuring co-pays for all services, including inpatient and outpatient hospital treatment. Enrollment: 6,113 employees Purdue has a total of 11,337 employees covered by these plans, including 14,663 dependents for a total of 26,000 lives.

  6. Current Programs • Expected cost for 2010 • Total Cost = $132.3 million (3rd largest budget) • Purdue Contributions = $115 million (87%) • Employee Contributions = $14.1 million (11%) [pre-tax basis] • Other * Contributions = $3.2 million (2%) *disabled, former employees and pre-65 retirees • Claims expenses for medical and pharmacy for 2010 are expected to be at $127 million. Other plan expenses include vision claims, CIGNA fees, COBRA fees, and some staff costs.

  7. Medical Budget Projection

  8. Proposed 2011 Plan Changes • Eliminate providing money in the form of an opt out credit to those who do not take Purdue’s medical benefits. • Part-time faculty and staff will have their premiums based on their full-time equivalent salaries beginning with 2011. • Purdue’s contribution will increase by 6% and employee premiums (overall) will increase by 6%. • Salary tier for faculty/staff premiums will go from $40,000 to $44,000. • Premiums based on salary will only change on January 1, and not with other salary changes during the year. • Dependents up to age 26 will be covered as required by law.

  9. Preventive/Wellness Coverage will be enhanced These services will be covered without limits at 100% when in-network providers are used for all three medical plans. • Annual Physical Examinations • Preventive imaging services: e.g., mammograms and osteoporosis screening • Immunizations for infant, child, adolescent, and adult • Preventive laboratory services: e.g., cholesterol, pap tests, and PSAs • Screening procedures: e.g., colonoscopies

  10. Proposed 2011 plans Purdue Choice Fund: no changes • In-network deductible:  $1,300 per person per year and $2,600 per family per year • Out-of-network deductible: $2,600 per person per year and $4,600 per family per year • Coinsurance after deductible: 20% in-network and 50% out-of-network • Preventive services: 100%, not subject to deductible • Purdue HSA contribution: $650/employee and $1,300/family

  11. Proposed 2011 plans Incentive PPO plan changes to current benefits: • Deductible: Current is $400; Proposed is $500 • Coinsurance for primary care: Current is 10%; Proposed is 15% (still not subject to deductible) • Maximum out of pocket: Current is $1,800; Proposed is $2,000 per person per year and $4,000 per family per year • Pharmacy maximum out of pocket: Current is $1,000; Proposed is $1,300 per person per year and $2,600 per family per year

  12. Proposed 2011 plans Co-Pay plan changes to current benefits • Establish a $250 deductible • Establish a 15% coinsurance • Both deductible and coinsurance for inpatient and outpatient hospital services only • Maximum out of pocket of $1,200 per person per year and $2,400 per family per year • Pharmacy maximum out of pocket: Increased from $1,000 to $1,300 per person per year and $2,600 per family per year

  13. 2011 Purdue Health PlansSenate Presentation Q & A’s October 7, 2010

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