Leaders respond to continuing health care questions from Faculty Senate

September 11, 2013

UNIVERSITY PARK, Pa. — University leaders were peppered with questions Tuesday (Sept. 10) from Faculty Senate members who expressed concerns about privacy issues and costs related to Penn State's newly proposed health initiative, "Take Care of Your Health." The initiative will focus on employee wellness and is expected to slow health care costs for the University, which is self-insured.

"I understand the serious concerns and anxieties that have been expressed by numerous faculty and staff. We take these concerns very seriously," said David Gray, senior vice president for finance and business/treasurer. But Gray said keeping the status quo would result in cost increase percentages projected to be in the double-digits annually over the next five years.

"This is without even incorporating what we expect to be the punishing, multi-million dollar impact of the Affordable Care Act’s definition of full-time employees, which will take effect in 2015," he said. Gray said under the new health plan initiative, Penn State expects to save more than $62.9 million cumulatively.

Gray, along with Susan Basso, vice president for Human Resources, and a number of representatives from Highmark in a 60-minute session responded to a multitude of additional questions from senators. The discussion was a follow-up to the questions posed to them by the Faculty Senate and answered in advance of the meeting. Those questions and answers can be found at http://news.psu.edu/story/286134/2013/09/03/administration/health-care-c... online.

"In fiscal year 2008-09, health care expenditures represented 9.3 percent of the total General Funds budget; by the current fiscal year, this proportion had grown to 11.5 percent. This represents a budgetary shift of over $39.1 million, the rough equivalent of either 4 percent in tuition or 4 percent in general salary increase funds," he said.

"These estimates, while conservative, could certainly be made to look even worse if the country is hit by another recession, if our steady state enrollment projections don’t hold up in the face of declining demographics, or if a variety of other factors that are largely beyond our control move against us," Gray said. "This is the backdrop that led us to conclude that we have little choice but to make significant adjustments in our health program. The University would face far more difficult options in the future if it avoids this challenge, including choices that would erode our ability to deliver on our fundamental mission of instruction, research and service."

Information about the University's efforts to control health care costs was included in the strategic plan in 2009 (found at http://strategicplan.psu.edu/healthcare online). Basso said she worked to maintain communications with key groups about the health benefits changes, beginning with a presentation to the full Faculty Senate in October 2011. She also met with the Faculty Senate Benefits Committee, the Senate Joint Committee on Insurance and Benefits, and with the University Staff Advisory Council. "In each of our discussions and meetings to date, we continued to approach the strategy with three primary goals: affordability, plan design and health care consumerism," she said.

A change that has already occurred is the monthly employee contribution to health care premiums, which Basso said was done with the help and support of the Faculty Senate.

"This change resulted in decreased monthly contribution levels for approximately 73 percent of our benefits-enrolled population, most largely affecting those individuals earning $75,000 a year or less," she said. "Additionally, we are continuing to maintain an average contribution rate for our employees of 17.5 percent. Some pay significantly more, while some pay significantly less, depending on their salary. This is a very competitive place to be for recruitment and retention purposes. Over half of our Big Ten colleagues have an employee contribution rate that is higher than Penn State's. At least one is as high as 30 percent."

Basso said she was charged in 2012 by the University president with keeping any rate increase for 2014 to no more than the Consumer Price Index plus 2 percent, equal to 5 percent overall. Basso said that keeping Penn State's benefits package competitive and "deemed by most as outstanding," meant that the University needed to focus on plan designs that support the notion that employees have responsibility to take greater control over decisions affecting their health.

A number of faculty members questioned the focus on wellness and the wellness profile. Basso explained that research from the Centers for Disease Control has indicated that the emergence of noncommunicable diseases has become a primary health concern. "The cost of a population living with chronic, long-term disease is far too high to be ignored, and promoting prevention and management of health conditions is a critically important element of our strategy. Being aware of our own risk factors and knowing the resources that are available to help manage those risks, is the first step toward prevention."

Michael A. Fiaschetti, president of health markets for Highmark, said his company represents 400 clients with structured wellness programs, representing 500,000 members. All of them have a wellness profile as a required element.

Within the Big Ten, 50 percent of the institutions use a wellness profiles as part of their wellness program. Nationwide, the recognition of the need to improve health and wellness in American universities led to the creation of the National Consortium of Building Healthy Academic Communities. The consortium was formed to help build and sustain a comprehensive and integrated approach to health and wellness in institutions of higher learning across the country. Information about the consortium can be found at http://healthyacademics.org/ online.

Basso promised increased communication about the changes. "In the coming weeks, there will be a webinar posted on the OHR website, a significant mailing to your home, as well as numerous face-to-face meetings to help you make informed health-care decisions for yourselves and your families," she said.

During the question-and-answer portion of the presentation, Faculty Senators communicated continued concerns over the privacy and security of employee information; the importance of communication about the changes being made; a desire for collaboration, including both shared governance and reaching out to faculty experts to inform decision-making; and accountability and transparency regarding the cost-saving outcomes of the program, as well as other topics. Gray, Basso and Highmark executives reiterated the answers to those questions, as provided to the Faculty Senate and found at http://news.psu.edu/story/286134/2013/09/03/administration/health-care-c... online.

One Senator asked if a moratorium or delay on implementation of the changes could be considered.

"Our financial challenges are so substantial, and some of the projections we're looking at for fiscal year 2015-16 are so daunting as a result of other factors that will impinge on us, such as the State Employees Retirement System (SERS) escalation of our employer contribution rate, if we don't get on top of this challenge now, each and every year we will compound the solution to this very deep and seemingly intractable problem," Gray said. "It would be my recommendation that we need to stay the course because this decision will impose consequences on this University that are almost unthinkable."

However, Basso said at the request of Senate Chair Brent Yarnell and endorsement of President Rod Erickson, she will be forming a task force to study this with the Faculty Senate. "I do believe that there is room around the margins to look at how we can make minor tweaks to the program going forward."

Also during the meeting, James Ruiz from Penn State Harrisburg presented a petition to convene a special Senate session to vote on a motion for a one-year-moratorium on implementing the health care changes. The Faculty Senate Council will meet to discuss the petition.

For information about the Take Care of Your Health Initiative, visit http://ohr.psu.edu/benefits/benefits-enrollment/take-care-of-your-health/ online. For FAQs, visit http://ohr.psu.edu/assets/benefits/documents/TakeCareOfHealthFAQs.pdf and http://news.psu.edu/story/284378/2013/08/15/administration/wellness-prog....

(Media Contacts)

Last Updated September 11, 2013