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Saturday, December 20, 2014

Insurance changes cause disruption

news@dailylobo.com
@ChloeHenson5

Lee Brown, a UNM professor of medicine, said the upcoming University health insurance changes will bring good things and bad things.

On the one hand, Brown will have access to his preferred BlueCross BlueShield plan. On the other, he said, out-of-pocket costs will be much more expensive when he uses the insurance, he said.

“Should I or my wife have some sort of major illness, we will be out of pocket a considerably larger amount of money,” he said.

The UNM Board of Regents passed the new healthcare plan last month, and many faculty members are unhappy with the new policies, said Richard Holder, faculty senate president.

The faculty felt the changes were painful, particularly to lower-paid employees, he said.

All of the modifications to the plan — which included the increases in deductibles, co-pays, out-of-pocket maximums and what constitutes a family — are aimed to save money for UNM, Holder said.

“I guess I understand why the University is doing that, but it’s sort of on the backs of the employees,” he said.

Before, an employee and spouse paid a different deductible and out-of-pocket maximum than employees with children, according to a memo from Gallagher Benefit Services, Inc. The new plan would broaden the definition of ‘family’ to include an employee with just a spouse.

Insurance deductibles and out-of pocket costs will double — and in some cases triple — for employees, according to the memo.

The single most common reaction to the insurance adjustments by staff was that the changes were not communicated as well as they could have been, said Gene Henley, staff council president.

The last few years have been hard on everyone at the University and changes will have to be made, but employees felt they were not given adequate time to prepare for these changes, he said.

“Everybody has been impacted, and I don’t think most people are resistant to that,” he said. “What they want to do is have the ability to plan, as opposed to having to react.”

COMPARISON

During the meeting to approve the insurance changes, the regents also agreed on a 3-percent raise in compensation for faculty and a 2.5-percent increase for staff.

For many faculty members, the raise will only account for the changes to the health insurance, Holder said.

“The take-home pay, at the end of the day, will be about the same this year as it was last year,” he said.

Brown will not likely see the increase in compensation next year, he said.

“Assuming I don’t get a lot of medical expenses, I’ll pretty much be where I was last year,” he said.

Deductibles and out-of-pocket maximums are not the only increases employees will see, Holder said. Contributions to the Voluntary Employee Beneficiary Association fund and the retirement plan will also increase, he said.

Retirees also pay higher costs compared to City of Albuquerque employees, according to Tom Rolland, a UNM retiree.

For instance, Rolland receives about $1,700 per month for his retirement check. This is after federal and state taxes are taken out, as well as about $183 for health insurance costs, he said.

The health cost for a single, pre-Medicare Albuquerque employee is $145.55, according to a document on the Public Employees Retirement Association of New Mexico website.

Healthcare costs for UNM employees in general are higher than costs for city employees, Rolland said.

“What UNM doesn’t want is for UNM employees to compare what their healthcare costs are to everybody else in the city,” he said.

It is difficult to determine whether City of Albuquerque employees have better health insurance options than they would at UNM because there are so many variables, Henley said.

“For some individuals, they may well find a better situation here than at APS or vice versa,” Henley said. “If you’re a family, you’re going to have different circumstances than if you’re a single … There’s not a one-size-fits-all answer.”

INCENTIVES

UNM’s decision to increase costs in healthcare also falls in line with the general national trend, said law professor Rob Schwartz.

“You can see UNM is going the way the rest of the country is going with regard to health care,” he said.

Healthcare costs have been rising for decades, Schwartz said, and increases in quality of healthcare, longer average life spans, general inflation and consolidation of the healthcare market could be contributing to that.

“I’m not sure the Affordable Care Act had much effect on the actual health insurance provided by UNM or by other employers in New Mexico or the rest of the country,” he said. “Down the road there will be substantial incentives on larger employers like UNM to provide affordable health coverage of some sort to their employees, but this year those incentives are not very strong.”

The largest impact the ACA had on New Mexico was likely through Medicaid expansion, Schwartz said, in that more employees of the University may be eligible for Medicaid now.

Brown said he thinks the changes came about as a result of inadequate state funding.

“I think (the changes) are a result of financial pressures that the University is under due to the failure of the state government to adequately support programs and activities of the University,” he said.

URGENCY

While UNM may be following suit with the rest of the country, Schwartz said he is not sure whether the University contributes as much to health insurance as other entities.

The City of Albuquerque contributes about 80 percent to medical insurance, according to a document on the city’s website.

UNM is expected to contribute about $42.1 million out of $65.25 million for total annual healthcare funding in the 2015 fiscal year, according to the Gallagher memo. That’s about 64.5 percent of contributions.

For employees making under $35,000 the University will contribute about 80 percent, according to the memo. It will contribute 70 percent for employees making between $35,000 and $49,999 and 60 percent for employees that make $50,000 or more.

If the University was to contribute more money to health insurance costs for employees, it would have to cut funding for something else, such as scholarships, libraries or faculty and staff pay, Schwartz said.

“This is one source of University money, just like anything else,” he said.

The new health insurance plan is expected to save about $1.9 million for the University, according to the Gallagher memo.

If there had been an extra source of revenue, the changes in healthcare costs need not have been so dramatic, Holder said.

“About the only way that can come about is through a tuition increase,” he said.

Henley said the discussion regarding tuition increases has concentrated for too long on how much an education at the University costs.

“The value question is what should be asked and answered, not the price,” he said. “In my mind, the value of an education at UNM far exceeds the price.”

If UNM is not able to pay competitive salaries, its quality of education may decrease, Henley said.

“If we lose good quality faculty because we simply can’t pay them what they can get somewhere else, what we will ultimately end up with is less than what we had,” he said.

The regents’ decision against increasing tuition in order to provide higher faculty compensation caused the healthcare changes to have a greater impact, Brown said. The alterations will make it difficult for UNM to maintain faculty and staff.

“It’s going to be another dissatisfier for retention of faculty and staff,” he said. “Certainly, recruitment of faculty will be made more difficult than it already is by the changes that they’re requiring.”