College
Alters Healthcare
By
Jesse Baer
In response to sky-rocketing costs, Oberlin College
is scaling back its employee health care plan.
“The new plan is going to involve the College trying to pass
more of the health care cost to the employee,” said Professor
of Expository Writing and English Leonard Podis, who serves on Oberlin’s
Faculty Benefits Committee.
Employees will now pay 10 percent of their medical expenses. Previously,
the College paid for all expenses. On the bright side for employees,
co-payments will drop to $15, from their present $25.
The company providing the insurance will also change. Oberlin uses
a “third party administrator” for its insurance, which
allows it to negotiate better discounts with medical care providers.
Oberlin decided to replace its provider, J.P Farley, with Cigna,
after an outside consultant determined that Farley wasn’t
offering competitive discounts.
“We believe that by moving to Cigna, we can significantly
cut the costs of our health,” Vice President of Finance Andrew
Evans said. He estimated that the savings would add up to about
$2.5 million per year. However, because the change will take effect
midway through Oberlin’s fiscal year, the full savings won’t
show up on paper right away.
Cigna has been beleaguered in recent weeks, reporting disappointing
quarterly earnings and finding itself the subject of a federal probe
by the Securities and Exchange Commission. However, Evans is confident
that this will not be a problem. He says that Cigna has assured
Oberlin that it is taking steps to fix its problems.
“We have to move ahead,” Evans said. “The plan
that is being put before us is a high quality plan.”
The changes were spurred by a dramatic rise in Oberlin’s health
care expenditures.
“The cost of Oberlin’s health care claims increased
significantly, about 60 percent over the last two years,”
Evans said. “This has been common across the country, but
ours increased at a rate greater than the national average.”
Evans listed a few reasons for Oberlin’s unusually high insurance
expenditures. Oberlin had relatively high drug costs to begin with.
Making matters worse, Evans added, faculty have made more and more
use of their insurance, and haven’t always made “the
best decisions for procuring that service.”
By making faculty and staff pay for a percentage of their own medical
costs, the new plan provides a disincentive for them to waste money.
For example, under the new plan, faculty will be less likely to
go to the emergency room for problems that do not require it, Evans
said.
Some have criticized the plan, arguing that it will hamper Oberlin’s
ability to recruit and retain faculty. Professor of Economics Robert
Piron said that the health care plan has helped compensate for lower-than-average
faculty salaries.
“Faculty agreed to accept lower salaries for cheap, immensely
satisfying health care,” he said.
Members of the Faculty Benefits committee did not believe that this
would be an issue.
“My understanding with this plan is that we’re very
much in line with our competitors, other selective liberal arts
schools,” Podis said. “We had a very capable consulting
company, and one of the things that they tried to do for us was
give us information on what the competition was doing.”
So far, there does not appear to be a major backlash to the changes
from Oberlin faculty and staff.
“I think people are relieved that the benefits will still
be very good,” Professor of English Sandra Zagarell, who also
serves on the Benefits Committee, said. She noted that the faculty
applauded the Committee’s presentation of the new plan.
She added, however, that “people are waiting to see how it
works out in practice.”
Podis said that there’s been some expression of concern from
faculty.
“It’s understandable, and we try to listen to people’s
comments,” he said. “But for the most part, they seem
to understand what happened.”
It remains to be seen whether College employees will still be applauding
a few years from now. The changes to Oberlin’s health care
plan may be just beginning.
“It seems like, in a way, we just got started, and it’s
probably going to keep happening,” Podis said. “We’re
going to have to revisit it next year.”
Evans said that the health care industry is out of control and the
cost to providers continues to escalate. “We must reevaluate
it every year to make sure that the cost of providing this benefit
is not outpacing our revenue,” he said. |