Progress continues toward the development of health care benefits for 2018

This is the first in a series of Penn State Today articles exploring the process of crafting the 2018 health care benefits plan design and cost sharing for Penn State.

UNIVERSITY PARK, Pa. – Although benefits open enrollment for 2018 isn’t until fall, Penn State has been hard at work over the past few months exploring health care plan design and cost sharing opportunities and requests for proposals for medical and prescription drug third-party administrative services.

“The commitment to employees is that the University will continue to provide access to high-quality, competitive health care benefits while keeping costs affordable,” said David Gray, senior vice president for Finance and Business.

Like many employers across the nation, Penn State has not been immune to the escalating cost of health care over the past few years. Managing the growing expense of providing high-quality medical benefits and prescription drug coverage for employees has remained a top priority.

Over the next two months, strategies to manage the rising cost of health care will come into sharp focus, and should provide Penn State employees with a clearer picture of what is likely to change with their medical and prescription drug benefits. 

For more than three years, faculty, staff and administrators with expertise in health care, health insurance and human resources have been exploring options and preparing their annual recommendations for Penn State’s health care benefits and cost-sharing model.

Those experts comprise three distinct committees – the President’s Health Care Advisory Committee (HCAC), University Faculty Senate Benefits Committee (FSBC), and the Joint Committee on Insurance and Benefits (JCIB) – and are charged with exploring questions, concerns and opportunities regarding employee benefits, and providing direction and recommendations to senior administration.

Two of the committees – FSBC and JCIB – are composed mainly of faculty, and were formed on the University principle of shared governance, while the HCAC includes both faculty and staff members, and was formed on the principle of strategic expertise and implementation of benefits decisions.

“The collaborative and inclusive efforts of these three University committees provide better informed decisions regarding the design and cost-sharing structures of Penn State’s health care plan,” said Gray, who also serves as the HCAC chair.

Among the three committees’ most significant contributions was development of six guiding principles for the design of Penn State’s health care plan, which was approved as an advisory and consultative report by the Faculty Senate last year.

Those six guiding principles recommend that any plan design:

- Offer choice to employees;

- Keep plans affordable;

- Maintain a fair cost-sharing approach;

- Make information accessible;

- Provide informed use when implementing data warehouse and cost transparency tools; and

- Foster a culture of health.

On Feb. 28, plan design and cost sharing considerations for 2018 will be reviewed during a special joint session of the FSBC and JCIB, with the Health Care Advisory Committee convening on March 3 to discuss that input. All three groups have regularly scheduled meetings in March to advance, modify and make final recommendations to the plan.

On April 25, the full Faculty Senate will be presented with the final 2018 health care plan designs and cost-sharing structure, which will comply with the guiding principles listed above and include input from all three committees.

Senior Director of Compensation and Benefits Greg Stoner is a member of HCAC and serves in an advisory capacity to the other two committees, and said the six guiding principles are providing a roadmap to help the three committees navigate between maintaining high-quality health and prescription drug coverage for employees, and addressing the unsustainable increases in cost for the University.

“The goal for everyone involved in this plan design and cost-sharing process is to address the rising cost of health care benefits for both Penn State and its employees without significant plan-design changes or increased financial burden for employees and their families,” said Stoner. “There will likely be changes, such as modest, more periodic increases in out-of-pocket expenses, but there will continue to be plan choice.”

Simply shifting costs to individuals who use Penn State health care is not a sustainable strategy and the University is taking steps to address the supplier side of health care through new medical and prescription drug administrative contracts. The current contracts end Dec. 31, 2017, giving Penn State the opportunity to select third-party administrators that provide advantages -- such as broad in-network access to high-quality providers, and lower health care costs to both employees and the University. 

Negotiated components of health care benefits – such as more favorable in-network discounts than currently exist, reduced administrative costs for Penn State, and steering more procedures and testing to cost-effective sites of service – will all positively impact the bottom line for employees, as well as the University.

Watch Penn State Today for the second article in this series, which will explore the process for selecting a third-party administrator for the medical and prescription drug benefits. The current administrative contracts end December 31, 2017.

Last Updated March 15, 2017