If private-sector CEOs were picketed every time they asked employees to contribute more to their health insurance costs, protests outside the corner office would be as common as coffee breaks at companies in Minnesota and elsewhere.
With health insurance premiums surging over the past decade, it’s a rare firm that hasn’t required employees to shoulder a greater share of their coverage costs — usually through higher office-visit copays, annual deductibles or monthly premiums.
In Minnesota, well over 80 percent of health plan enrollees now have an annual deductible — the amount first paid by an employee before the insurer starts paying — according to state health department statistics. Nationally, more than 40 percent of private-sector workers now have a deductible of $1,000 or more, according to a 2012 Kaiser Family Foundation report. The average private-sector worker also pays between $24 and $35 for office-call copays.
So sympathy is in short supply as unionized University of Minnesota workers start making their case publicly against proposed changes in the university’s generous health benefits.
Key changes include a $10 increase in most doctor’s office copays that brings these charges to $25 to $35 for most plans. Employees in most plans also will start paying an annual deductible of $100 to $400 a year. Employees’ monthly premiums — about $77 for individuals and $334 for family coverage for the base plan — will remain flat or decrease with wellness participation.
While no one likes to pay more for medical costs, the U’s current generous plan is merely morphing into a somewhat-less-generous plan — one that takes steps toward plans private-sector workers typically have. From where most Minnesotans sit, particularly those who buy on the expensive individual market, the U’s health plan will remain enviable.
Nevertheless, these changes have generated outrage from one of the unions currently in collective bargaining with the U. On Monday, dozens of American Federation of State, County and Municipal Employees (AFSCME) marched through campus and went to U President Eric Kaler’s office.
“If University of Minnesota administrators get their way, they would shift millions in health-insurance costs onto campus workers. Even the lowest-paid employees would pay hundreds of dollars a year more in deductibles, premiums and co-pays,’’ said an AFSCME statement. The union represents 2,900 U workers. Median full-time wage: $37,398.
AFSCME representatives dispute the U’s reasoning for the move. Officials say that without change, the value of its health plans will exceed thresholds for so-called “gold-plated” coverage that kick in under the Affordable Care Act in 2018 and thus trigger an excise tax that could create a $48 million tax liability over five years. The tax, sometimes known as the “Cadillac tax” should help hold down overall health care costs by pushing employers and consumers to shop more aggressively for coverage and care.
AFSCME also disputes that the changes need to kick in before 2018, while the U maintains that the lead time is necessary to determine if the changes have worked and to accommodate collective-bargaining cycles.
Regardless of the ACA’s role, more vigorous cost control is needed at the U, which has been held up nationally as an example of administrative bloat. Other higher-ed institutions need to do the same. The cost of a college education is becoming a crisis for society. Tuition simply cannot continue ever upward.
Making higher ed affordable necessarily means scrutinizing employee health care costs and, very likely, bringing them more in line with the private sector. The gap between public and private employer benefits also is unhealthy, and will create political problems for public unions and their allies if it continues.
AFSCME pointed out that the U’s cost-saving concerns also need to extend to its ranks of highly paid administrators and its spending on athletic coaches, activities and facilities. Fair enough.
The problem, however, isn’t that the U is being too aggressive on health care savings. It’s that the U and other institutions haven’t been aggressive enough in pursuing savings in all areas.