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Friday, March 29
The Indiana Daily Student

Medical premiums rising for IU workers

Medical premiums will jump 12 to 30 percent next year for IU faculty and staff, a double-digit increase for the third consecutive year. But the impact will be softened, as the University will also raise its health-care contributions by a double-digit rate.\nThe University plans to offer six kinds of medical plans in 2003, and four of them will demand higher premiums than this year, depending on the size of family an employee insures, according to documents published by the IU Human Resources Services. The premium increase will range from $29 to $149 a month. Costs are generally higher for employees insuring their kids, spouse or entire family.\nThe University will raise its fixed medical contributions by 18.4 percent, a weighted average of the six plans' rates, according to those documents.\nIn 2003, IU's health-care contributions will total $74 million, a hefty 72 percent increase from $43 million in 1999, said Daniel Rives, associate vice president of IU Human Resource Services. With the costs of medical services soaring nationwide, human resources officials expect the prices of IU health-care plans to keep rising in parallel after 2003, said Susan Brewer, director of IU Health and Welfare Plans.\nWhen spring rolls in, University officials may discuss whether to change the way it divides health-care premiums between workers and employers, Rives said. But it's too early to speculate whether IU will shift more financial responsibility to employees.\nTechnically, it's not the University administration but the schools and departments that pay for IU health-care contributions, along with all the other employee benefits, Rives said.\n"For example, in the event that benefit-program expenses increase at a faster rate than state funding, (the University's) units may reallocate funds from salary reserves, positions and other budget items," Rives said.\nSchools and departments don't single-handedly reallocate their budget items. Directions roll down from the IU administration to campus administrations to campus responsibility centers to schools and departments, according to Steve Keucher, IU Budget Office director.\nIf the price of health-care services keeps rising as rapidly, some IU departments may become unable to pay the insurance costs solely by rearranging or canceling other budget items. \n"Solutions to this problem will involve senior administrators and the trustees of the institution," Keucher said. "At this time, it is premature to speculate on outcomes."\nOne reason for the rising costs of health-care services is medical providers shifting costs to those who can afford their services, Brewer said.\nHistorically, health-care providers have earned the largest chunk of their revenue from Medicare and Medicaid, federal insurance programs for elders and the poor, Brewer said. But the U.S. government has been paying less and less for those programs, and medical providers are watching their revenues decline.\n"So what they do is to shift costs to make more money off the people who are paying," Brewer said.\nAlso, medical costs may rise as the aging U.S. population uses more medical services, Rives said. Advanced technology drives health-care costs higher, too, though it extends lifespan. With uninsured population increasing, insurance firms charge existing customers more. And new prescription drugs come out with higher prices.\n"Essentially, both the price and quantity of medical services are increasing at a rate that significantly exceeds the general inflation of other goods and services," Rives said.\nOnce a year, IU officials adjust the amount of the University's self-funded medical plans.\n"To establish premiums for several self-funded health care plans, IU depends on third-party administrators -- several of which are insurance companies -- to provide data on current (medical) expenses and actuarial projections of associated expenses for any future period," Rives said. \nTo offer self-funded plans, the University pools money from employees and its own contributions, and uses the fund to buy access to physician networks and customer services, and pays employees' medical expenses covered under those plans, Brewer said.\nIU has no price control over the two medical plans it offers through health maintenance organizations, which independently set their prices, Brewer said.\nUnder the new rates, which will become effective in January, the monthly premium for the IU PPO-Plus family coverage will rise 27 percent to $975. Employees will pay $314 of that premium, an increase of $103 from this year. \nThe IU PPO-Pus coverage for an individual employee will climb by the same rate to $354. Employees will bear $63 a month, which is $30 more than this year. \nThe same trend holds true in IU PPO-Choice, whose family-coverage premium will rise 30 percent to $1,098. Employees will be accountable for $437 of the premium, and that's $149 higher than this year. The premium for individual workers will also rise, and they'll pay $108 a month, up $46 from this year.\nThe IU PRO $900 Deductible, which finances medical costs of policyholders after they spend $900 out of their pocket, will have no increase.\nNo IU employees in Bloomington belong to the University's HMO plans, for medical service providers in town don't participate in them, Brewer said.

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