Rice to pay greater share of rising medical premiums

After discussion with the university’s faculty and
staff Benefits Committee, Rice President Malcolm Gillis
has decided to:

• Cap the employee increase to the HMO plans at no
more than 10 percent above current rates, absorbing the
rest of the 19 to 20 percent increases being imposed by
the HMOs.

• Cap the employee increase in the GMI/PPO plan at
29 percent above current rates, absorbing the rest of the
full 40-percent increase.

• Hold the catastrophic (major medical) plan at the
same cost to employees as this year’s.

Employees must make their choice of health care coverage
during the April 15-26 open-enrollment period.

“Health care prices are accelerating,” Gillis
said. “At Rice, the proposed increases for the HMOs
and the GMI/PPO are especially staggering. These increases
also come in a year when returns on the endowment have been
negative, our property insurance premiums increased by more
than 200 percent and other key priorities demand our attention.
Funding the increased cost of Rice’s usual share alone
will strain the budget significantly.

“Nevertheless, we understand the burden of the additional
costs to our faculty and staff, especially the lower-wage
staff. We have decided to find the funds necessary to not
only absorb the increase in Rice’s share of the costs,
but also to cushion the projected increase for faculty and
staff.”

For fiscal year 2003, Rice will pay from $2,532 (MethodistCare
HMO) to $5,148 (GMI/PPO) per year for individual health
insurance coverage and from $6,240 (MethodistCare HMO) to
$11,976 (GMI/PPO) per year for family health insurance coverage.

Rising health-care costs are a national problem, and Houston
has higher health costs than many other parts of the country.
In addition, Rice employees use more health care per person
than employees of many Houston and national firms, Cronin
said.

“Higher use and higher costs have a number of reasons,”
she said, “but one major outcome is that, as a community,
we pay higher health care premiums.”

In negotiations that began in January, Human Resources actually
brought the carrier’s original estimates for overall
medical plan increases down from 25 to 45 percent over last
year’s cost.

“We were expecting higher rates, but I think we were
all shocked to see the medical plan rate increases as high
as they were originally proposed. Thankfully, we were able
to negotiate a better deal for the university,” said
Elaine Britt, assistant human resources director. “Unfortunately,
a better deal for medical insurance still means that the
prices needed to rise considerably. The reality is that
many people in the Houston area as well as the country as
a whole are living with the impact of higher medical costs.”

In consultation with the faculty and staff Benefits Committee,
the university also made some changes in plan design —
such as increases in copayments for the HMOs and increases
in deductibles for the GMI/PPO — to keep monthly premiums
more affordable. In response to many employees’ requests,
in-network mammograms, pap smears and routine prostate screenings
no longer will be subject to the deductible in the PPO.

Responding to another recommendation from the benefits committee,
Gillis also called for a task force to perform a complete
review of the substance and cost of health benefits before
the development of the university’s fiscal year 2004
budget. Gillis has asked that the task force propose creative
long-term solutions that seek to balance the needs of the
community with the resources of the university.

“By absorbing more of the costs that are beyond our
control,” Cronin said, “the university has given
us a breather to look carefully at how our health plans
are constructed, how important they are as part of our overall
compensation and how other employers are responding to this
very painful and difficult dilemma. The task force may present
major revisions to the plans as a result of this review.

“In the meantime, we encourage everyone to thoroughly
consider the available offerings, think about contributing
to a medical spending account, and take advantage of pre-tax
payment of benefits to reduce taxable income.”

The final monthly rates for the 2003 fiscal year appear
above. Open enrollment packets will contain more detail
regarding the new rates and the new plan designs. Packets
will be mailed to all benefits eligible employees at their
campus addresses April 11. The open-enrollment period is
April 15 though April 26.