Last year's shift to a new prescription drug plan has saved the University an estimated $300,000 while keeping employees satisfied, said Drew Murphy, director of benefits for Human Resources.
The University cut prescription drug benefits out of its health plan in January 2010. Instead of financing pharmaceuticals directly, it joined universities like Columbia, Cornell and Princeton in the Preferred University Rx Purchasing Coalition and bought prescription drug coverage from Medco Health, Murphy said.
Large, self-funded employers tend to carve out certain services to "save money without giving up any other benefit," Murphy said. "Now everybody has the same benefit, both faculty and staff."
Until 2008 — when the University decided to become self-insured — employees could choose health plans from two providers, Blue Cross Blue Shield or United Health Care. "The card says Blue Cross or United, but in reality Brown is actually paying the bills," said Karen McAninch '74, business agent for the library workers' union.
"It directly saves a lot of money in administrative costs," she added. McAninch said the University has saved about $3 million a year since switching to self-insurance.
Health insurance costs for college employees are higher than other employer-based insurance plans and rise at greater rates, according to research cited in a Feb. 27 Chronicle of Higher Education article. Benefit Consulting Services founder Jeff Mitchell, who conducted the research, told the Chronicle that insuring a college employee costs more than $10,300 per year on average, whereas the national average for businesses is $8,500.
Murphy said the shift to self-insurance has allowed Brown to avoid rapidly growing costs. Costs increased 5.3 percent in 2009, 0.9 percent in 2010 and 9.5 percent this year, he said. Murphy estimated the University saved $300,000 in prescription drug coverage in 2010, which amounts to approximately 5 percent of its prescription drug costs.
Health care costs usually see "conservative increases" of around 10 percent per year, and part of this year's increase is due to the Affordable Health Care Act, he said. The health care reform law now dictates that children of faculty and staff can stay on their parents' plans until they are 26 years old, whereas before the law, children were covered through their parents' insurance up to 19 years of age, or 25 if they were students.
"Costs are going to climb. We are just trying to reduce how quickly they are climbing," Murphy said.
During the transition to Medco, the University compared differences in benefits of prescription drug coverage under Blue Cross/Blue Shield and United Health Care, combining the better benefits from each in the new plan.
But the new plan has not been instated without employee complaints.
McAninch cited a library worker whose co-payment used to be $7 for two medications but who now pays $25 for one and $40 for the other. She also said there have been issues with Medco not covering certain medications until they go through an authorization process as well as continued problems with automatic billing.
"There were some complaints about preauthorization and quantity limits because (employees) did not have to do that before," Murphy said. "We haven't gotten one of those kind of complaints in six or seven months."
"I think there are relatively minor complaints, but I feel Brown should address them," McAninch said.
Of the approximately 7,000 faculty and staff members insured by Brown's health plan, Murphy said 85 percent have seen no change in co-payments. Eight percent of co-payments have decreased, and 3 or 4 percent have increased, he said.
McAninch said some prescriptions that were offered at a lower generic rate were shifted to a more expensive tier, but others drugs experienced a shift in the opposite direction.
"Overall, it might even be a break-even situation for employees," she said.
"Our projection is that we will save money — that is shared by both the University and employees — but we are also providing what we feel is in many cases a better benefit than when we were carved in," Murphy said.
