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02/12/92

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Some medical plan employee contributions reduced

STANFORD -- Stanford University non-union employees and retirees with individual health insurance coverage will be paying from $10 to $15 less per month than originally proposed, officials have announced.

Vice President for Human Resources Barbara Butterfield, in a letter to the Stanford community last Nov. 22, made a commitment to seek input from concerned faculty, staff and retirees and re- evaluate the 1992 medical plan contribution structure. The previous month, it had been announced that, due to skyrocketing insurance costs, Stanford workers for the first time would be required to contribute from $25 to $31 per month for individual health insurance.

The announcement was protested by some staff members, for reasons ranging from a perceived inequity (because employee contributions for dependent coverage were reduced slightly at the same time) to general employee dissatisfaction (because September 1991 pay raises were deferred until March 1992).

In response to numerous letters, telephone calls and comments made during sometimes acrimonious "town meetings," Human Resources officials established a series of focus groups and a task force within the new Employee Roundtable to study the issue.

As a result of recommendations from those groups and the Committee on Faculty and Staff Benefits, the following changes have been announced:

  • Active employees with individual coverage and retirees under age 65 will pay $10 less per month than was proposed for 1992. As an example, the proposed monthly employee contribution for Kaiser coverage was $25; under the new plan, the contribution amount will be $15.
  • Retirees age 65 and over will pay $15 less than was proposed. For example, a $21 contribution was proposed for those individuals covered by Blue Shield. Now, they will pay only $6 per month. Since a $15 contribution was proposed for Kaiser coverage, that option will remain free for these retirees.

'Positive compromise'

The new contributions will begin for exempt employees with the March 22 paycheck, and for non-exempt employees with the Sept. 22 paycheck. The contributions will go into effect for retirees with April coverage, which is paid at the end of March.

Contribution amounts for employees and retirees with two- party or family coverage will remain as originally proposed for 1992. The changes have no impact on workers represented by the United Stanford Workers union; the union last fall signed a three- year contract that retained zero contributions for individual employees but increased rates for multi-party subscribers.

The changes were endorsed by the Committee on Faculty and Staff Benefits, Benefits Manager Jim Franklin, Butterfield, President Donald Kennedy and Provost James N. Rosse.

"The proposed structure represents a positive compromise that permits us to respond to employee concerns without sacrificing sound benefits design," Butterfield said. "All active employees will be making some monthly contribution to their health coverage; the great majority of retirees will also be contributing, but there will be one plan (Kaiser) available to retirees age 65 and over at no contribution during 1992.

"Principles of creating positive competition among our health care providers is maintained," Butterfield said.

The change in the rate structure will cost the university an estimated additional $500,000 for 1992. The additional cost will be paid out of the benefits pool, with a portion charged to research grants as well as the operating budgets of each department.

Retiree relief

A number of university officials attempted to explain last fall that the individual contributions were unavoidable and, in a sense, beneficial, since they created competition among insurance carriers and would lead to overall lower costs.

"The days of free health care, unfortunately, are over," Butterfield stated in a Campus Report "Viewpoint" published Nov. 20, 1991.

Many, however, were not convinced and made their feelings clearly known, leading to the formation of the focus groups and, ultimately, the roundtable.

The Employee Roundtable's first order of business was to form a task force to re-examine the benefits rate structure. The task force, in making its recommendations, responded to three needs: the hardship of many retirees on fixed incomes, the concerns of active staff and the current university budget crisis.

The task force expressed "unanimous concern" for retirees on fixed incomes, according to Lori Lee of the Benefits Office, and elected to recommend a more significant reduction for retirees than for active employees. Also, the lesser reduction for active staff limited the impact on the university budget.

The group also requested that the premium amount for individuals not be increased in 1993. The 1993 rates will be announced later this year.

The process

Human Resources conducted 13 employee focus groups over a two-week period in early January; the groups were specifically formed to address the controversial contribution structure. The comments and survey results from those meetings were compiled into a report that was presented to both the Committee on Faculty and Staff Benefits and the task force of the Employee Roundtable, Lee said.

The committee, chaired by Graduate School of Business Prof. Alain Enthoven, a nationally recognized expert on health insurance, then approved the roundtable's recommendation and forwarded it to the president and provost in early February.

Nine of the focus groups were made up of employees randomly selected from the campus and Stanford Linear Accelerator Center employee database, Lee said. Another was for retirees who had expressed interest. Two groups were held on Monday, Jan. 13, and included 34 employees who had written letters on the subject, and another Jan. 14 session involved faculty members.

The opinions of participants, Lee said, were "extremely diverse."

In the nine focus groups of randomly selected employees, 30 percent showed up for the session.

Butterfield said that level of participation was "disappointing, given the level of interest during November and December." Nonetheless, the demographic composition of the focus groups was largely representative of the Stanford community. For example, 63 percent of Stanford employees have single-party coverage, and individual subscribers made up 59 percent of the focus group participants.

While the focus groups were convened on a one-time-only, one- issue basis, the Employee Roundtable will be in place as a permanent entity so that a broad range of Human Resources issues, including benefits, can be discussed.

Benefits staff members are currently looking at new long-term strategies, Lee said, and the roundtable will have the opportunity to make recommendations on the contribution structure for 1993 and beyond.

The roundtable is not elected; its members were selected by Human Resources managers from a pool of nominated staff members.

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