Introduction

1. The Benefits Advisory Committee has reviewed the proposals for modification of health benefits submitted to us by the University administration. We are deeply disturbed by the proposals. They reflect a breakdown of the social compact between the State, the University, and its employees. Together with other actions being taken at this time, the proposal undermines the foundations for employee loyalty to and support of the institution.

2. We are concerned that the reduced benefits, coupled with a pay freeze and with substandard pay rates for some employee groups, will make the University increasingly uncompetitive in recruitment and retention of the most highly qualified employees.

3. We note that in many instances the present benefit levels have been achieved as a result of employee groups foregoing salary increases. The reductions are thus, in a very real sense, simply a reduction in the employees’ compensation.

4. We nevertheless recognize that, in the present fiscal situation, benefit reductions may be inevitable if we are to avoid even more serious damage to the institution. In light of this unfortunate reality, we make these comments on the proposal.

5. The Committee finds the “move toward benchmarks” argument totally unconvincing. Unless and until the University takes equally effective steps to move salaries and other benefits toward the equivalent benchmarks, this claim is totally unjustified and should not be used. “Benchmarks” cannot be a one-way street.

6. Under the proposed plan, employees would be meeting about 10% of the University’s budget shortfall through their own sacrifices. We urge the University administration publicly to acknowledge this contribution in its description of strategies, as it has done with the sacrifices asked of students through increased tuition. To bury this sacrifice of its employees in an aggregate number of various “operating cost savings,” along with such items as more economical purchasing of cleaning supplies, is demeaning to employees and to the sacrifices they are being asked to make.

7. Employees and their families are no more able to respond quickly to the impacts of fiscal challenges of this magnitude than are the departments and colleges of the University, especially in the time of pay freezes. We urge the administration to take timing of the impact of changes into account in preparation of the final plan.

General comments

1. The reduction in University contributions to health benefits should be held to the minimum level absolutely necessary to avoid more serious damage to other aspects of the University. We have not been given adequate time or information to judge the necessity of cuts of this size. Because of the impacts of these cuts, we believe that more serious consideration should be given to other across-the-board cuts or to targeted reductions. We thus make no recommendation regarding the proportion of the fiscal challenge to be borne by employees through the health plan.

2. If cuts at or near the magnitude suggested by the proposal must be made from health benefits, it is almost inevitable that much of the cost will be borne by increased premiums charged to employees. We accept the proposition that these added costs should be carried equitably both by those having single coverage and those having family coverage.

3. While we recognize that in the present circumstances the employees and the University may need to share in the increased cost of health care over the next biennium, we would strenuously oppose any reduction of University contribution below the dollar amount of support in the current biennium.

4. The proposed cuts will have substantial adverse impacts on all employees. Under the proposal submitted the premium for basic medical coverage for single employees for medical and dental insurance would increase by $400 or more, and those of families would increase by $1,100 or more at the time a wage freeze is also in place. Increases in the employee part of the premium for optional plans would be as high as $823 for individuals and $2,200 for families. No rhetoric can disguise the fact that these proposals are a drastic reduction of compensation for all University families. Such compensation cuts are untenable. We recommend that the University contribute at least 90% of the cost of health care both for individuals and for families. This would result in total cost increases of $400 for individuals and $500 for families in the base plans, with correspondingly higher increases in the optional plans.

5. Even if this less severe proposal is implemented, we believe the total impact of premium increases on any employee should be no greater than 2% of gross salary, at least until the salary freeze ends. This will require differentiated treatment of those on individual and family plans.

6. We recognize the right of bargaining units to negotiate their health benefits, and we stress the importance of maintaining a uniform set of UPlan options for all groups of employees.

7. The University must create stability in the structure of the UPlan and in the level of its expected commitment to it. While we recognize that annual premium increases for employees are nearly inevitable, we also believe that the structure of the plan and the share of the University’s contribution should remain unchanged over a substantial period. If the basis for University contribution becomes subject to radical change on an annual or biennial basis, the benefits package will lose its credibility as a recruiting and retention tool.

Responses to specific parts of the proposal

1. We reaffirm the principle that the University’s contribution should be measured by the cost of the least expensive base plan that provides quality medical care. Employees who choose more expensive options should pay for the difference in cost. To do so, we must include only the lowest-cost clinics and care systems in the base plan. Other clinics and care systems that provide outstanding service, but at a higher per-patient cost, should be freely available through optional plans. Applying this principle, we concur in the recommendation that access to the UMP Clinics be made available only through optional plans, unless they can lower their costs to fit within the risk adjusted costs of the base plan in its zone. We also would encourage the Boynton Health Service to pursue ways of remaining within the base plan.

2. In light of our review of the proposal and our discussions of issues throughout the year, we support the following changes contained in the proposal:

3. We suggest modification of the proposal in the following respects:

4. We note that there will need to be adjustments to the PCA and deductibles of the Definity plans to reflect the changes in co-pays in the other plans.

5. We make the following suggestions for the dental plan: