February 20, 2009
Dear Ohio University Faculty and Staff,
As you know, Ohio University and many of its peers are facing unprecedented budget challenges. Working groups at our institution are examining scenarios to increase efficiency, save resources and protect our core academic mission.
Rising health care costs are a particular concern. Indeed, we are projecting a 4 percent increase in health care costs for the fiscal 2010 budget. Reducing these costs is critical to our ability to mitigate cuts to colleges and academic support units. In short, the savings we achieve together on health care costs will reduce the number of layoffs at the university.
We would like to share with you the three scenarios under consideration to lower these costs while minimizing the impact on employees and their families.
To put these changes in context, however, it is important to note that Ohio University's health care benefits are highly competitive with our counterparts in the state of Ohio and stand out as top-of-the-line when compared with peers nationwide. Any of the scenarios under consideration would not change that fact.
What follows is an overview of Benefits Advisory Committee (BAC) proposals to reduce institutional health care costs by $1 million, $3 million and $5 million, respectively.
The BAC made recommendations to the Budget Planning Council (BPC) that balanced increases between all health plan contributors and individuals who use health care services more frequently. The goal was to spread the costs equitably while ensuring that increases would not discourage use of health care services.
Proposed Changes to Employee Health Benefits
$1 million proposal
These changes would require employees to order maintenance drug prescriptions by mail and to purchase generic drugs when available. The university also would require employees to pay a $50 monthly surcharge to cover a spouse who has insurance available through his or her employer but has elected to be covered by Ohio University. Additionally, if both spouses work at the university, the higher salary would be used for calculating the monthly premium.
$3 million proposal
In addition to the changes outlined in the $1 million reduction scenario, employee premiums would rise to 12.15 percent of total plan costs, from the current 9.85 percent. Co-pays would rise to $20, from $15. A deductible of $200 per individual or $400 per family also would be added. Co-insurance limits would rise to $1,000 per individual and $2,000 per family, from the current limits of $750 and $1,500, respectively.
$5 million proposal
This contingency plan would increase employee premiums to 16 percent of total plan costs. Compared with the $3 million plan, employees would pay higher deductibles ($300 per individual, $600 per family) as well as higher co-insurance limits of $1,500 to $3,000, respectively.
As the committee evaluated the three proposals, members also considered ways to increase the quality of health care. They put forward a set of suggestions that included improving vision, dental and mental health coverage and an expansion in coverage for dependents who are full-time students from age 23 to age 25 with a monthly surcharge.
The BPC has recommended that the university pursue the $1 million proposal as a minimal first step. BPC is now considering the additional changes outlined in the other proposals.
Following BPC's final recommendations, any changes in employee premiums must be presented to the Faculty Senate for approval , according to the Ohio University Faculty Handbook. There is an urgency to the university's task as benefits decisions must be made by March 15 to give the university's health care administrator, Anthem Blue Cross Blue Shield, time to put them in place by July, the beginning of our fiscal year.
To that end, we encourage you to examine the presentation available at www.ohio.edu/budget/resources.cfm. After reviewing that presentation, please submit any questions or suggestions that you might have to your supervisor, chair or dean or to your representative on BPC. The names and contact information of those representatives also can be found on the budget site.
Executive Vice President and Provost
Senior Vice President Finance and Administration