01/31/97

CONTACT: Gary North, Ohio University, 614/593-2555

ATHENS, Ohio -- Ohio University officials received the preliminary recommendations for potential changes to employee health care benefits Friday (Jan. 31) from Columbus-based health benefits consultant William M. Mercer Inc.

Mercer already has verified Ohio University projections for a steep increase in employee health care costs through June 1998. Ohio University officials estimate a 30 percent increase in health care costs -- the result of a 13 percent deficit in the current year plus a 17 percent projected cost increase in the next fiscal year.

The university estimates a nearly $1.4 million health care budget over-run this year, and a $4.6 million health care budget increase next year.

In the long term, Mercer recommends Ohio University consider a comprehensive "cafeteria plan," which would allow employees to tailor benefits to their needs, selecting from plans ranging from indemnity coverage to a network of providers who would offer discounts to patients. Campus officials already have suggested that the university's Benefits Advisory Committee begin discussion of the cafeteria plan concept.

Among the 22 short-term cost-containment strategies Mercer recommends that the university should consider in its medical, prescription drug and dental plans are: * Initiation of greater utilization review controls, triggered by diagnosis. Covered individuals could receive free advice regarding the need to see a doctor or to visit an emergency room, or whether a second surgical option is warranted, etc.

* Increasing each single deductible by $50 and each family deductible by $100. Currently, deductibles are based on salary ranges. * Increasing the annual out-of-pocket maximum from $500/$1,000 (single/family) to $1,000/$2,000.

* Implementation of employee contributions for part-time faculty and administrators, or initiation of contributions from all employees on a single and family basis.

* Implementing a 25 percent co-payment per retail prescription with a $5 minimum and $25 maximum, or a mandatory generic plan with a $5/$10 co-pay. Currently, the university plan uses retail co-payments of $5 generic and $10 brand name.

* Increasing the dental deductible from $25 to $50 per person. "We want to make clear that all recommendations must be considered preliminary at this point in the process," said Vice President for Administration Gary North. "The Benefits Advisory Committee will review this report, and all employee groups will be consulted during consideration of possible changes to our health care benefits plans."

Joyce Predmore, University Human Resources assistant director for benefits, noted the university's current health care plan offers a deductible and out-of-pocket maximum that are lower than national industry standards, and does not restrict which health care providers are chosen by employees. The benefits plan is considered part of an employee's total compensation package, but costs for the plan are not deducted from base salary. Moreover, no additional payment is required for coverage of employees' spouses and children.

"The medical, prescription drug, and dental benefits provided to Ohio University employees and dependents are very rich compared to those we typically see. This is a big plus when costs are favorable, but difficult to maintain when costs increase unexpectedly," the Mercer report concludes.

For a copy of the report, contact University News Services at 593-1043, 164 Scott Quad.