University's endowed health-plan rates will rise, due to higher costs

By Jacquie Powers

With health-care costs continuing to rise dramatically across the nation, Cornell will increase 2002 health-care rates for endowed faculty and staff while maintaining a high level of coverage, according to Mary George Opperman, vice president for human resources.

"While these rate increases are higher than in recent years, and higher than we had hoped to have to pass on, we have tried to spread them out as fairly and equitably as possible," Opperman said. "To that end we have increased premiums and deductibles the most in those plans that have experienced the greatest increase in claims costs. And on a positive note, there will be no benefit cutbacks at Cornell in 2002 in any of the endowed benefit plans."

At the same time, Opperman said, Cornell will continue to cover the same percentage of the health-care costs that it has in the past: 90 percent of employee costs and 75 percent of family costs. "That means that the university will be absorbing the bulk of the cost increases in real dollars," she added.

New rates for all health-plan options will be detailed in the open enrollment home mailing that is being sent out Nov. 5. (See chart, below.)

Other changes to the 2002 health plan include:

• a three-tier plan to help buffer Cornell's above-the-national-average prescription drug costs;
• several desirable new features in the dental plan;
• a new long-term care program; and
• positive changes in the long-term disability program.

Opperman said that preferred provider organizations, such as Cornell's Aetna Open Choice PPO, and point-of-service plans, such as HealthNow's POS, are experiencing great price pressures because of increasing use of services by plan members. In addition, most health plans' pharmaceutical costs are projected to increase at 20 percent or more in 2002. Even the presence of in-network physicians, health-care centers and pharmacies that tend to help keep costs low can only do so much in a strong inflationary environment, Opperman said.

Indemnity plans, such as Aetna's 80/20 Plan, are the hardest hit, she added. Indemnity plans do not have access to in-network health-care providers with negotiated fee schedules. So, there is little such a plan can do to offset the premium increases in this market. Some indemnity plans at other universities and large employers will increase premiums by 50 percent and more, Opperman noted.

Paul Bursic, director of benefit services, said Cornell has done three things in order to be equitable in the distribution of the cost increases.

"First, we have decided that people should share the increased costs in proportion to the costs and features of the plan they choose. The 80/20 Plan costs have increased the most, partly because people enrolled in that plan have total choice over their care and often choose more costly specialists. In addition, Aetna does not negotiate for lower fees for health-care services with this plan.

"The HealthNow POS plan negotiates effectively on health-care fees and therefore has experienced the least increase in costs. Participants also work through their primary-care physician for referrals to more expensive specialists. The Aetna Open Choice plan falls between the other two."

For that reason, Bursic said, the premiums and deductibles of the most costly plan -- the 80/20 Plan -- are increasing the most, with the Open Choice Plan second and the Health Now POS plan the least.

Bursic noted that dental premiums will not increase this year. He also pointed to several plan improvements:

• The annual maximum benefit will be increased from $1,000 per covered person to $1,250 per covered individual.
• The schedule of reimbursements in Plan B will pay more for dental procedures than the current schedule.
• The in-network dental panel will soon add two new practices.

Bursic said Cornell's long-term care plan has become outdated by federal legislation and is being replaced by a plan offered by CNA Insurance of Chicago. The old Aetna long-term care plan participants will get a special mailing discussing their options. They can stay with Aetna, if the plan satisfies their needs, or move to CNA, preserving the convenience of payroll deduction and getting a more up-to-date plan.

The new CNA plan offers lower premium rates, better coverage, payroll deduction and a very responsive company, Bursic said.

Bursic said that as part of the long-term disability (LTD) plan enhancements, the definition of disability has changed effective Sept. 1. Under the new definition, known as "own occupation" coverage, disabled beneficiaries will be better able to collect LTD income while attempting to return to work in their own profession or another. This change will bring the definition of disability for LTD into line with the definition used in the administration of the university's short-term disability plan.

The LTD Plan also will be changed to allow up to $7,500 of maximum monthly income, making good on the promise of 60 percent of pre-disability monthly income to more faculty and staff. The university will pay the costs of these improvements for those who pay no premium for this coverage. Faculty and staff who do pay a premium for the coverage will see small increases in the payroll deduction, Bursic said.

The open enrollment period for the endowed health plans runs Nov. 12 through Dec. 7. It is the only time during the year that employees may change their health benefits without a change in work or family status. Additional information will be included in the "For Your Benefit" newsletter next week.

2002 Endowed Health Plans Rate Structure

Rates shown are based on 26 pay periods for nonexempt staff and 24 pay periods for exempt staff and faculty.