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HEALTH CARE COST SHARING CHARGE

Committee Committee on Sustainable Health Benefits (COSHB)
Sponsorship Robert Kelch, Executive Vice President for Medical Affairs

Tim Slottow, Executive Vice President and Chief Financial Officer

Teresa Sullivan, Provost and Executive Vice President for Academic Affairs

Laurita Thomas, Associate Vice President for Human Resources
Charge of the Committee

As a responsible employer, the University aims to provide high-quality, comprehensive and affordable health plans while being a good steward of limited resources. By 2003, the University had faced several years of double-digit health care cost increases. It sought to manage these increasing costs by analyzing and then adopting a new health insurance premium-sharing model based on the University paying 85% of the aggregate cost of premiums and a new four-tier premium rate structure. These strategies proposed by the Committee on Health Insurance Premium Design (CHIPD) and implemented in 2005 did not consider employee out-of-pocket costs such as co-pay and deductibles. Currently, for employee-only coverage, the University contributes 95% of the average total premiums of the two lowest cost comprehensive health plans. For dependent coverage, the University contribution is reduced, resulting in the 85% aggregate contribution. When out-of-pocket co-pays and deductibles are included, our current aggregate ratio is 80% University and 20% employee cost share.

Like most employers in the U.S., the University of Michigan continues to face escalating health care costs. Increasingly, larger amounts of resources are being devoted to health care insurance, creating upward pressure on tuition and making resources less available for salaries and other important priorities.

This newly formed 2008 Committee on Sustainable Health Benefits (COSHB) is charged with making recommendations about the cost-sharing mechanisms to achieve aggregate new target for University and employee contributions. Premiums and out-of-pocket co-pays and deductibles will be considered in the cost-sharing ratio. Implementation of the recommendations may be phased over a two-year time period to reach an aggregate 70% cost share from the University and 30% from employees toward the total cost of premiums and out-of-pocket co-pays and deductibles. The committee will also consider part-time employees and retirees in their recommendations. Salaries are to be considered in recommendations on contribution amounts. This effort is part of the University’s commitment to effectively balance responsible financial stewardship with the ability to recruit and retain outstanding faculty and staff by offering benefits that are competitive in the marketplace. For more information, click here to download Stewardship of Benefits: The Case for Change (pdf).

Objectives

The primary objective of the COSHB is to provide advice, guidance, and recommendations with regard to:

  1. health plan cost sharing targets for the University, employees, and retirees; and to identify and address how these targets can be incorporated in the rate development process

  2. co-pay and deductible levels, and contribution-level cost containment measures with regard to part-time benefits and retiree health contributions

  3. approaches and alternatives for recognizing employee salary levels in setting employee co-premium contributions and out of pocket costs

  4. a re-evaluation of the models of co-premium sharing based on the two lowest-cost plans

  5. the current ratios used to set relative premium levels across tiers
Scope and Boundaries

The primary focus of the COSHB is on the impact and implications of cost sharing as it relates to the total cost sharing (co-premium and out of pocket costs) as noted above to insure that the University has identified possible outcomes and consequences including any inherent potential for unintended incentives or disincentives for faculty, staff, and retirees.

The Committee may form and charge subcommittees to work on specific tasks, as appropriate.

Membership

Kyle Grazier, Chair: Professor of Health Management and Policy, School of Public Health, and Professor of Psychiatry, Medical School

Anne Berens: Assistant Vice Provost, Office of the Provost

Tony Burger: Director of Financial Analysis

Patricia Butler: Vice President of UM Retiree’s Association, Retiree

Tom Buchmueller: Waldo O Hildebrand Professor of Risk Management and Insurance, Professor of Business Economics and Public Policy, Stephen M Ross School of Business and Professor of Health Management and Policy, School of Public Health

Tom Campbell: Associate Vice President for Strategic Planning and Business Development, EVPMA and Director, UMHS Contracting office

Marty Eichstadt: Director, Benefits Administration Office

Robert Ernst: Medical Director, Health Service Clinic Operations and Adjunct Clinical Associate, Internal Medicine, Medical School

Bob Fraser: Assistant Director, Mardigian Library, UM-D

Richard Hirth: Professor of Health Management and Policy, School of Public Health

Helen Levy: Assistant Research Scientist, Health & Policy, School of Public Health, Research Assistant Professor, Survey Research Center, Institute of Social Research, Adjunct Assistant Professor of Economics, College of LSA and Adjunct Assistant Professor of Public Policy, Gerald R Ford School of Public Policy

Joel Slemrod: Paul W McCracken Professor of Business Economics, Ross School of Business; Professor of Economics, College of LSA

Lynette Wright: Manager of Materials and Moving Services, Plant Operations

Content experts will attend meetings as needed.

Subcommittees or working groups drawn from areas representing the issues may be formed (see Objectives).

Staff Support Heather Desgrange: Administrative support, Benefits Administration Office

Rich Holcomb: Director of Compensation, UMHS Human Resources

Etta MacDonagh-Dumler: Project Manager, University Human Resources

Brian Watson: Financial Analyst, Benefits Administration Office
Timeline September-November 2008: Committee meetings
Dec 2008: Committee Recommendations
Progress Reports
  • Agendas and Meeting Notes

  • MHC-AC for advice: Sept 11, Oct 9

  • Status Reports
    • BLT October 30
    • EVPs Nov 11

  • Final report December 2008