MSU raises employee insurance rates

Insurance payments shouldered by one in four full-time Missouri State University employees will rise next year to make up for an annual $1 million imbalance between employee contributions and actual health care costs.

The change fits within the seemingly inexorable rise of health care costs during the past decade but also appears to be relatively isolated in Springfield, as other local schools say they have no firm plans to raise their own employee premiums.

MSU Board of Governors voted to make the change Oct. 18, raising monthly payments for the employee spousal and employee family tiers of coverage by $30. About 540 of the university’s roughly 2,000 full-time faculty and staff currently pay for those plans, which will cost between $350 and $390 per month starting Jan. 1.Ken McClure, MSU’s vice president for administrative and information services, said the move – as well as a change in how the university tabulates its own contribution to employee health plans – will address spousal claims, which have exceeded employee contributions toward spousal coverage by $1.3 million each of the past three years.

“It’s something we’ve been watching for a while,” he said. “We take raising premiums very seriously, and it’s not something we want to take lightly.”

A long time coming
Premiums for the two affected plans haven’t changed since 2007, McClure said. The difference between payments and employee contributions gradually grew to $1.3 million, he said, and three years at that level became a trend clear enough for action.

After the board’s vote, MSU also will trim down the cost difference by budgeting explicitly for the $135 it defrays each month from the affected premiums.

“By doing this, it’s a specific line item in the budget,” McClure said. “That should cover the shortfall.”

According to the rate-hike proposal, these changes were recommended by the university’s third party administrator, Springfield-based Med-Pay Inc., as “necessary for the fiscal stability of the university’s employee medical insurance plan.”

Med-Pay President Gordon Kinne declined to speak specifically about MSU’s plan, but said most plans are in flux right now.

“About everybody is seeing some form of adjustment,” he said, though he noted that businesses that aren’t self-insured, unlike MSU, were seeing the biggest cost increases. “Our self-funded cases, we’re seeing some adjustments there too but usually just in the single digits.”

Kinne added the ACA’s mandates contributed to the increases, but cautioned that it was too early to judge how big of a role the law will play.

At MSU, the coverage offered by the plans and the number of covered employees have remained relatively stable, McClure said, but the claims themselves simply have grown larger. He couldn’t say for sure why that was the case.

“Health issues vary, and the number of claims and size of claims vary year to year,” he said.

Employer insurance costs – and employee contributions – have risen 80 percent or more since 2003, according to a report released in August 2012 by the Kaiser Family Foundation, a Menlo Park, Calif.-based nonprofit that investigates national health care and policy issues.

The report shows MSU’s premiums are in line with this year’s average cost for employees: about $380 per month.

“I think most people realize we’ve been fortunate not to have to adjust premiums for seven years now,” McClure said. “I think there’s a recognition that it’s something we need to do.”

The growth of health premiums slowed this year to between 3 and 4 percent, the slowest in several years, according to the Kaiser report and a separate report released this month by London-based insurance broker Aon PLC.

They credited the recession and employer attempts to restrain costs, such as raising employee premiums and offering waivers for employees who buy coverage for themselves only and quit smoking, get a physical or meet other requirements. MSU and Drury University currently offer such waivers.

But Aon’s analysis also predicted the rate of health insurance increases would pick up again next year as the recession continues to fade and employers become less cautious. Experts say companies should anticipate higher future costs because the Patient Protection and Affordable Care Act requires employers to cover more. For example, children can stay on plans until the age of 26, and pre-existing conditions can’t play a role in benefits.

An isolated change
MSU’s McClure said the rate increase isn’t related to the continued implementation of the federal health care law. Enrollment in ACA’s insurance exchanges, where people without insurance can browse for different levels of coverage, began Oct. 1, with extensive technical problems reported since.

McClure added the change isn’t affected by the MSU board’s simultaneous approval of benefits for employees’ domestic partners, both same-sex or opposite-sex. He said he expected the expansion would cost MSU an additional $83,000, a small blip compared to the $14.3 million total paid by the university for family benefits in fiscal year 2013.

At Drury, spokesman Mark Miller said he wasn’t aware of any plans to increase employee premiums at the Springfield-based private school. He noted the university has a wellness program that allows some employees to waive their monthly costs.

When asked if Drury also had seen health care costs rise in the past few years, Miller wrote in an email: “I can tell you that Drury adopted CoxHealth as its preferred provider health care network because the university realized significant savings.”

He declined to specify those savings. Drury’s spousal coverage costs $300 a month for fiscal year 2013, while family coverage nears $600.

Evangel University spokeswoman Valorie Coleman said next year’s premiums typically aren’t set until December, though discussions on the matter have begun.