University costs for faculty and staff health insurance will increase by 2.5 percent in 2015, staying consistent with trends from the past five years. Deductible and co-pay rates have remained unchanged since 2005, said Drew Murphy, director of benefits. Health care costs are a substantial portion of the University’s operating budget.
The total cost of employee benefits for the fiscal year that ends June 30, 2015 is about $94 million, and health insurance benefits accounted for about $31 million of total benefit expenses, according to data provided by the Office for Finance and Administration. Total compensation, including all benefit and salary expenses, accounts for about $400 million of the $900 million operating budget, The Herald reported Nov. 7.
Health insurance costs increased an average of 3.1 percent from fiscal year 2010 to fiscal year 2014 and salary compensation increased an average of 3.8 percent, according to data provided by the Office for Finance and Administration.
Employees “have to contribute to their health plan a certain amount, then the University pays the difference,” said Beppie Huidekoper, executive vice president for finance and administration. On average, the University pays for about 80 percent of all employee health care costs, she said.
Huidekoper said the issue of health insurance costs “really factors into the overall financing of the University,” because if incremental costs are increasingly significantly, “we have less ability to do other things.”
The Deficit Reduction Working Group will look at all of the benefits the University currently provides to determine if they make sense, Huidekoper said. President Christina Paxson charged the group with recommending organizational changes to find $7 million in cost savings, The Herald reported Oct. 16.
“We’ve done really well in containing the growth of the cost of our health benefits, particularly relative to other employers,” Huidekoper said.
“If benefits were growing a lot it would be harder to give increased salaries,” Huidekoper said.
Harvard announced in September that due to rising health care insurance costs, those insured by the institution will now pay a $250 deductible, the Harvard Crimson reported. Murphy said the University currently does not require those insured to pay a deductible, and co-pay costs have not increased since 2005. “We’re hoping that we can continue to keep these down.”
In 2015, the co-pay for generic prescriptions will decrease and the co-pay for branded prescriptions will increase, Murphy added. Because generic brands are “much less expensive,” Murphy said he hopes the change will increase the generic fill rate and decrease health insurance costs.
“One of our uncertainties right now is the Affordable Care Act,” Huidekoper said. “We have to provide some additional benefits that we didn’t before.”
The ACA requires that all dependent children under age 26 be insured, Murphy said, adding that previously, the University only insured employees’ dependent children who were students under age 25.
Murphy also said the ACA will affect cost increases adding taxes, fees and required benefits. “The Transitional Reinsurance fee will cost Brown approximately $500,000 in 2015.”
When the University became self-insured in 2008 — meaning that it now pays for all insurance claims instead of paying a premium to health insurers — there were associated cost cuts because carriers charge a fee to account for the risk they are taking on, Murphy said.
The University has kept increases down by introducing wellness programs and encouraging employees to make informed decisions about health care, he said, adding that if people stay healthy and don’t have unnecessary tests done, “they have less claims.”
“I think Brown has a very good benefit package with one exception,” said Professor of Biology Ken Miller ’70 P’02, citing a need for improvements to the Tuition Aid Program — an initiative that provides children of faculty members with a $10,000 annual scholarship.
When Miller’s daughter graduated from Brown in 2002, the scholarship was $10,000 per year, Miller said. In 2002, this covered about 38 percent of tuition costs, but today, it would cover about 22 percent of the University’s tuition, he said.
Open enrollment for University health, dental and flexible spending benefits for 2015 opened Nov. 10 and is active through Dec. 1.
A previous version of this article incorrectly stated that the University requires those insured to pay a deductible. In fact, it does not. The article also previously misstated the University’s former policy for insuring dependents: It insured employees’ dependent children who were students under 25, not just those of faculty members. The Herald regrets the errors.
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