Faculty Council Meeting

250 Student Union April 14, 1998

President Halligan called the meeting to order with the following members present: Ackerson, Arquitt, Bertholf, Bice, Bierman, Buchanan, Cole, Dawson, Edgley, Finn, Gedra, Horn, Hsu, Kimbrell, Krenzer, Lawry, Locy, Martin, Moder, Richards, Robinson, Schwarz, Scott, Sisson, Warde and Wilkinson. Also present: Birdwell, Beer, Blakley, Collins, Jones, Keener, Konigmacher, Lingelbach, Matoy, Mitchell, Najd, Oehrtman, Watkins, and Young. Absent: Miller, Montgomery, and Smith

HIGHLIGHTS

1. Health Care
2. Report of Status of Faculty Council Recommendations
3. Reports of Standing Committees
   1. Retirement and Fringe Benefits
   2. "Changes in Health Care Insurance" Recommendation
   3. Academic Standards and Policies
   4. Budget
      1. "Faculty Computer Allocation" Recommendation
   5. Graduate Student Association Liaison Report
   6. Campus Facilities, Safety, and Security
   7. Faculty
   8. "Personal Profit on Required Materials" Recommendation
   9. Research
      1. "Research Scientist Positions be Added to the Faculty Handbook" Recommendation
      2. "Research Professor Positions be Added to the Faculty Handbook" Recommendation
      3. "Research Committee for Faculty Council" (proposed addition to Faculty Handbook)
      4. Rules and Procedures
         1. Election Results
4. Reports of Liaison Representatives
   1. Athletic Council
   2. Student Government Association
   3. Campus Space Committee
   4. Student Publications
   5. Staff Advisory Council
5. New Business

Dr. Warde moved acceptance of the March 10, 1998, Minutes. Dr. Lawry seconded the motion. The Minutes were approved.

Dr. Birdwell said in a recent meeting it was asked, "Did you not see this increase in health care costs coming?" Another question that was asked was, "How did you go from a surplus to a deficit in so short a time?" Two years ago the plan had a $6M surplus reserve. Because of the size of our federal research projects OSU came under the federal cost accounting standards. These say that if a surplus has been generated in anything that has a remote connection to a federal research activity then this surplus must get back into the correct hands. The Health Care Committee decided on a plan to return the $6M to the participants in the health care program through subsidizing premiums over a three year period. Due to increases in health care costs and increased usage of the system the surplus was exhausted sooner than three years. The administration was able to renegotiate the contract to hold the line on administrative costs. If the present plan were to continue with no change then it would generate approximately $18M in premiums and pay out $23M in benefits. More than 2000 people returned the survey. There was no effort by the committee to have the participants validate a conclusion that the committee already held. There were positive things said about the options but there were several people that were unhappy with all the options. One person replied that the survey was like being asked whether your demise should be by being shot, stabbed or having taken a lethal injection. The administration has worked with the HCC to look at a bridge period in order for consultants to study the situation and make a recommendation as to the best option to follow in health insurance. For several years OSU has been a part of a self-insured program but may have reached the point where this is not a good alternative. Fortuitously, the Board of Regents asked us to engage a health care consultant to assist the University and the Board in analyzing the health care package. OSU has had an RFP asking for such help for several months. There are 11 or more responses so over the next 30 days a decision will be made as to whom the long-term health care consultant will be. In the meantime the administration is looking for ways to decrease costs. It was discovered that some procedures are higher in Stillwater than for most other locations in OK. Cimarron Health Plan was contacted and urged to meet these charges. Dr. Oehrtman distributed an information sheet on the A&M Institutions Health Care Plan. During Feb. and Mar. 1997, the health insurance for OSU was rebid. Thirty two bids were received. Some of the bids were for fully insured plans, some were HMO's and others were for Administrative Services only. Six vendors were invited to campus to present their proposed bids. Premiums for the fiscal year 1997-98 were established based on the information gained from these six vendors. None of them foresaw the claims increase. By mid-August the HCC received the preliminary claims data through Feb. '97 which showed very erratic monthly costs. Shortly thereafter, American Fidelity asked for $2M from our surplus funds to meet claims demands and again in October another $2M was needed to cover the difference between claims and premiums. This is when the HCC started considering alternatives to and within our health care plan for fiscal year 1999. In Jan. 1998 the HCC met with the administrator of the OK State and Education Employees Group Insurance Program. They were chosen because they were the only insurance that could be brought to campus without going to rebid. The survey was prepared to provide information to the committee. Most people liked the coverage of our plan better and liked the fact that we had control over our plan but they liked the premiums of the State Plan. American Fidelity was then asked what kind of benefits plan could be offered as a bridge program if the premium structure of the state plan were used. The state plan was asked to come to answer questions in an open forum on Mar. 16. The HCC was surprised when the representative also talked about an HMO and a Medical Saving Plan since they were led to believe that the HealthChoice indemnity policy was the only option available to us. The HCC and American Fidelity came up with the following bridge program. Premium changes to nearest dollar: Employee from $160 to $171, Spouse from $160 to $206, Child from $95 to $78, Children from $95 to $140, Retirees, w/o Medicare from $168 to $261, Spouse w/o Medicare from $168 to $290, w/Medicare from $100 to $155, Spouse w/Medicare from $100 to $159, Retiree/Spouse w/State from $30 to $45, Retiree/Spouse Tertiary from $30 to $30. Benefit Changes: Deductible from $250 to $400, Co-pay from 90/10 and 80/20 to 80/20 and 70/30, Prescription plan up to $20 minimum, Eliminate $300 supplemental accident benefit and add $100 emergency room deductible, Eliminate $55 incentive payments, routine health exams and Vitality magazine from Wellness, and add mental parity with a limit for in-patient to 30 days and out-patient to 26 visits. These changes would bring both the projected premiums and projected costs to approximately $18M. Dr. Halligan gave the following summary of the HCC proposal. Premiums and benefits would be changed as listed for 6 months and a consultant will be engaged to help choose the best option which hopefully would go into effect January 1999. The premiums were adjusted so that each group would approximately pay their own way. Under the old plan some groups were subsidized at the expense of others. Dr. Moder said that some people are currently insuring their spouse or children outside the plan because they can get a similar coverage for less. Why is this? Dr. Blakley said that it costs less to provide coverage for a selected individual in good health than if you have to take everyone in the group. Dr. Moder asked why the HCC decided to change to actuarially determining premiums from the current method. This change puts most of the increase on the employee and makes the amount paid by the university increase by a smaller amount. Dr. Blakley replied that prior to this pricing cycle the state plan also subsidized spouses and children, but felt that they had to do this to help control the price increases. Dr. Moder said it only controls the cost for the institutions not the employees. Are they going to be given raises to cover this? Dr. Robinson said that some other programs in the city are not charged as much for medical procedures as we are. Dr. Birdwell said that we are negotiating with CHP on this. Dr. Moder asked if the PPO is affecting our costs. Dr. Oehrtman replied that preliminary data shows that it is, but it is too early to know. Dr. Birdwell said that a survey of state institutions showed that the increases in health care costs ranged from 16% to over 30%. Dr. Edgley said that the break down of community is a big worry. The idea that I am not going to subsidize your kids is very mean spirited. If these kinds of things are going to be considered then why not introduce behavior. Why should the smokers or heavy drinkers be subsidized? Dr. Halligan said that the proposal is for six months and we have to quit losing money. Dr. Edgley said that he strongly supports getting a consultant in to study the program and applauds the efforts made by the HCC. Dr. Moder said that a concern is for a person who is recently retired and had planned for the health care costs that we had before and now they are being hit with a large premium increase. Dr. Birdwell asked if faculty were willing to forego all or part of a salary program to provide a subsidy to retirees, children or whatever group. Dr. Moder asked what it would take to not nail the retirees. Dr. Arquitt replied that you could increase everyone by 15% and cover the costs of the reduced benefit package. Dr. Birdwell said that this would cost the university approximately $1M more than this program which would have to come out of a raise program or reallocation of funds if there is no raise program. Dr. Blakley pointed out that the proposed rate for retirees already contains a subsidy since it is based on the rates of the state plan which is capped at $90 over the employee rate. Ms. Matoy pointed out that the retirees are getting between $70 and $75 from OTRS to be applied to health care costs. Dr. Sisson said that one of the ways to keep claims down is to have a healthier faculty. The $55 Wellness Center incentive payment was eliminated. Why are faculty charged $120 a year to use Colvin Center? At many universities such facilities are provided without cost to faculty. Dr. Beer said that the entire cost of the Student Center is paid by students. Dr. Arquitt said he is more worried about the spouse and families with two children. How many are in that category? Ms. Matoy said that there are approximately 1200 spouses, 1500 in the children or child category, and 5625 employees; but, the plan also covers the four A&M institutions. Some of the other institutions have a much bigger budget problem than OSU does. Dr. Halligan says the most telling comments he has heard are those from people that say they will not be able to continue coverage for their children. If Halligan was in the subsidy business, he would go to a different line than retirees. Dr. Moder said that some of these people will seek out other providers and perhaps get it for less money for kids; however, retirees may have a hard time finding cheaper insurance due to pre-existing conditions. Dr. Birdwell said that if the single category for children was continued then the increase for larger families would not be as great. Dr. Halligan said he would not subsidize the large families on the back of the single child family. Dr. Wilkinson said that she has one child and has had to subsidize larger families. At one time she chose to insure her son through an outside provider in order to save some money. Dr. Buchanan said that he would like to thank Drs. Birdwell, Oehrtman, Blakley, Ms. Matoy, and the HCC since it is evident that they listened to our discussion last time.

President Halligan, Executive Vice President and Vice Presidents