Health-insurance premiums for St. Thomas will increase an average of 16.9 percent beginning Jan. 1, and office co-pay costs will increase from $10 to $15 per visit under Blue Cross and Blue Shield of Minnesota coverage.
The higher rates mean that families will pay an additional $213 a year for health coverage, and individuals will pay $141 more. The university will pay an average of $594 more per employee for health coverage, 76 percent of the $753,000 increase in health premiums and 74 percent of the overall $5.2 million bill.
The 2000 rates, approved by the administration and based on a unanimous recommendation from the Fringe Benefits Committee, also call for Delta Care dental-insurance rate increases of $9.10 a month for singles and $26.80 a month for families. Employees insured under the Delta Select (fee for service) plan will have no rate increase.
The double-digit health care increases follow several years of increases under 10 percent, including 1999, when 90 percent of St. Thomas employees did not face rate increases. Employees will pay less in 2000 than they did in 1998 if they were under the Medica plan in 1998.
"Companies and organizations large and small across Minnesota are facing health insurance rate increases of 20 percent or higher," said Dr. Michael Sullivan, vice president for business affairs and chair of the Fringe Benefits Committee. "The only way that we were able to avoid a 20 percent increase was to increase the office visit co-pay amount to $15 for most employees."
In an effort to soften the financial impact of short-term and long-term rate increases on families, the university also will change the percentage of what families and individuals will pay.
This year, faculty and staff with family coverage (398) pay 38 percent ($206.60 per month) of the cost of insurance, and St. Thomas pays the remaining 62 percent ($335.66). Faculty and staff with single coverage (678) pay 9 percent ($20.96 per month) of the cost, and St. Thomas pays the remaining 91 percent ($208.58).
Under the new policy, an effort will be made over five years to have families and individuals pay the same percentage of premiums.
In the first year (2000), the cost of single coverage will be 12 percent of premiums, an increase of $11.79 per month, from $20.96 to $32.75. For family coverage, the cost will be 35 percent of premiums, an increase of $17.73 per month, from $206.60 to $224.33.
Future percentage changes have not been determined in the family-single pool, but Sullivan said the goal is to reach a point, by 2004, where all employees pay the same percentage of premiums regardless of whether they have family or single coverage.
"It is increasingly common in organizations, whether they are profit, nonprofit or government, for employees to pay the same percentage of family or single coverage," he said. "The Fringe Benefits Committee believes this also should happen at St. Thomas, but there is no way to put that into effect in one year because it would result in a huge increase for single coverage. We will have a series of smaller increases over five years for single coverage to bring rates in line."
More than 92 percent of St. Thomas employees have health care coverage through Blue Cross and Blue Shield. The remainder (72 individuals or families) is with Health Partners, which has agreed to extend coverage through Dec. 31, 2001. There will be no change in the plan design at Health Partners, and co-pay charges will remain at $30 per office visit.
The Fringe Benefits Committee considered a three-tier plan, which would have provided different rates for families, individuals and "individuals plus one" (couples, for example) but chose to stick with a two-tier system for 2000. A three-tier system would have meant 25 percent rate increases for families, and the committee was committed to keeping those increases below 20 percent.
The news on dental insurance rate increases is mixed.
Employees in the Delta Select (fee for service) plan — they choose their own dentist, pay a higher deductible, pay 20 to 50 percent of services and have a maximum annual benefit of $1,000 — will have no rate increase in 2000. They will continue to pay $24.63 a month for single coverage and $71.68 a month for family coverage. This year, 191 individuals and 114 families are enrolled in the Delta Select plan.
Employees in the Delta Care plan — they choose a dentist from a pool, have no deductible, pay a lower percentage of costs for services and have a maximum annual benefit of $1,500 — will face significant increases in 2000. They will pay $20.58 a month for single coverage (a 79 percent increase from $11.48 this year) and $68.58 a month for family coverage (a 64 percent increase from $41.78). This year, 374 individuals and 231 families are enrolled in the Delta Care plan.
St. Thomas had little bargaining power in determining the new rates, Sullivan said, because Delta Dental has a virtual monopoly in the dental insurance industry.
Sullivan thanked members of the Fringe Benefits Committee for their work on the health and dental plans. Members are Dr. Marsha Blumenthal, Greg Hendricks, Dr. Michael Jordan, Roxanne Kainz, Diane Luke, Pat McGowan, Denise McManus, Dr. Robert Miller, Steph Monogue, Dr. Mary Reichardt and Colleen Striegel.