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.

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