Officials say high-quality health care options remain a priority
Alain Enthoven
Diane Peck
BY JON ANN LINDSEY
As university officials prepare for October's open enrollment period when staff members choose from a range of health-care options, they have reaffirmed their commitment to providing high-quality choices that meet the individual and family needs of employees.
"The last few years have been challenging ones for families and employers because of rising costs nationally," said Diane Peck, executive director of Human Resources. "Despite these challenges, Stanford has made health-care coverage a top priority and continues to offer a breadth of excellent choices and access to employees. This includes continued access to Stanford Hospital and the Palo Alto Medical Foundation for those who choose those options."
Stanford's contributions to employee health-care plans have increased by more than 140 percent over the past six years as costs in healthcare have skyrocketed nationally. In fiscal 2000, the average university cost per participant for active employees was $2,374. It increased about 16 percent a year and is projected to be $5,758 for fiscal 2006.
"The dramatic rise in health-care costs is a broad societal concern," said Randy Livingston, vice president for business affairs and chief financial officer. "The question is, how does that cost get borne by different constituents?"
Health insurance premiums for a family of four increased by 8.2 percent in California last year, according to the 2005 California Employer Health Benefits Survey conducted by the California HealthCare Foundation. The survey is an offshoot of a national employer study conducted by the Kaiser Family Foundation and the Health Research and Educational Trust.
Livingston said that as costs have risen, Stanford not only continues to cover the majority of the cost of health-care benefits, it also has absorbed most of the impact of those rising costs.
Alain Enthoven, the Marriner S. Eccles Professor of Public and Private Management, Emeritus, said other employers would be wise to adopt Stanford's model of offering a range of insurance choices to stimulate competition among health plans. Enthoven is on the Committee on Faculty/Staff Human Resources that advises university officials on health plans.
Many employers, especially smaller ones, don't want to take on the administrative costs of offering numerous plans, Enthoven said, and insurers are reluctant to compete for customers within employer groups.
"They don't like what they call 'sliced business,'" he said.
But as a large employer, Stanford can offer a range of choices. Currently, the university offers six. Stanford pays 100 percent of the cost of coverage for employees who choose the lowest-cost option, which has been Kaiser Permanente for the past few years.
In addition, the university has paid an amount equal to 82 percent of the lowest-cost option toward the cost of healthcare for employees with dependents. Employees who do not select the lowest-cost plan receive the equivalent contribution toward whatever plan they choose and then pay the difference themselves.
Enthoven said this "responsible choice" approach encourages people to choose the most economical plan that fits their needs.
"One of the best things we can do is give people the opportunity to spend their money wisely," he said.
In July, the university announced it is considering offering fully paid employee and dependent coverage for the lowest-cost plan for university employees whose total family income is less than $45,000 beginning in 2007. Bargaining unit employees might also be eligible, depending on discussions with their union during negotiations, which are under way now.
Peck said this program would be consistent with a philosophy that tries to use health-care dollars in the most efficient way and provides good alternatives to those who earn the least.
In a benefits survey of 21 Bay Area companies conducted earlier this year by human resources consulting firm Towers Perrin, Stanford ranked in the top third in the value of its active employees' medical benefits. It ranked in the very top tier in terms of overall benefits value.
"When you look at the full package—tuition assistance, child-care subsidies, life insurance, paid holidays—Stanford really does stand out," Peck said.
A survey of a smaller group of large Silicon Valley employers showed that the average employee contribution toward the lowest-cost health plan was 16 percent for the employee only, compared to no required employee contribution under Stanford's plan. The average contribution required of an employee for a family plan was 20 percent, compared to Stanford's 18 percent. None of the nine companies in the smaller survey offered a zero-cost plan.
"Even though the costs to employees are going up, Stanford continues to pay the vast majority of costs for healthcare," said Peck. "The university remains committed to providing quality health-care choices for our employees."
Jon Ann Lindsey is a writer for the Office of University Communications.