Health insurance rates to increase

During Open Enrollment 2006, from Wednesday, Oct. 26, through Tuesday, Nov. 15, the university will offer benefits-eligible employees a choice of the same six plans that were offered for 2005.

Kaiser Permanente again will be the lowest-cost plan offered to employees and will be free to employees for employee-only coverage. But increases in costs for employees for other levels of coverage and other plans range from relatively modest to dramatic. The cost to cover an employee and family in the Kaiser HMO will rise 12 percent, from $82.17 per pay period to $91.80. Employee-only coverage in the Only@Stanford plan, which is administered exclusively for Stanford employees and allows access to Stanford Hospital and Clinics, will more than triple, from $19.75 per pay period to $66.57.

The method Stanford uses to determine university contributions is to cover 100 percent of the lowest-cost option for an individual employee and 82 percent of the lowest-cost family plan. That amount is then contributed toward the cost of premiums for any university-offered medical plan.

"Stanford employees' health care needs vary greatly. We offer a wide variety of health plans that vary widely in design and cost to meet those needs. We want to be able to provide affordable health care and we believe we do that," said Gerri Burruel, director of benefits. "Each year the lowest-cost plan is offered at no cost to employees. This is something most employers do not provide today," she said.

The Kaiser plan cost increase of 12 percent was the lowest among the HMO plans. The widest gap in cost increases in the plans that Stanford will offer employees is between three managed care plans—Kaiser, Health Net HMO and PacifiCare HMO—and non-HMO plans—Only@Stanford, the 3-Choice Health Plan and Lumenos—which allow employees more autonomy in choosing physicians and medical treatments (see chart).

Benefits staff had expected that the Only@Stanford and Lumenos plans, offered for the first time last year, would attract young and healthy participants who would help contain health care costs, said Burruel. It didn't work out that way, she said. Instead, the plans' flexibility and the access to physicians chosen by plan members attracted a disproportionate number of those who seek medical care more often, Burruel said.

Rising hospital costs and the cost of high-tech diagnostic tests and the latest prescription drugs all play a role in the price increases, she said. But because the three non-HMO plans are self-insured, specific attributes of the Stanford population—such as age—also factor directly into the plans' cost, Burruel said. The average age of employees at Stanford is, at 46, high compared with other employee populations, she said.

Of the approximately 12,000 employees who enrolled in medical plans offered by Stanford last year, about 25 percent enrolled in Kaiser in 2005. A little less than 25 percent—about 2,600—are enrolled in one of the non-HMO plans.

One of the factors that reins in the cost of HMO-style plans offered by the university is Stanford's membership in the Pacific Business Group on Health (PBGH), a nonprofit coalition of 50 major institutions and businesses in Northern California that negotiates collectively in contracting for medical plans. Burruel headed the PBGH team negotiating 2006 benefits.

BenefitSU also will continue its prevention program, WellnessYou, which rewards employees who complete a health-risk survey offered by their chosen medical plan and participate in other wellness activities.

There is good news, too, in the vision plan. Participants now are allowed to buy frames every year (under the current plan, new frames are available every 24 months). The frame allowance will increase in 2006 from $120 to $140 and the co-payment for exam plus lenses and frames will be $25, instead of $30. The cost of vision coverage will not rise for 2006.

"We offer a choice of health care delivery models so that employees can choose what works best for them. We offer tools, such as the Educated Chooser, to help them make that decision," Burruel said. "Many Stanford employees want the freedom to direct their own care and that option is available to them in Lumenos and 3-Choice. Others want access to Stanford Hospital and Clinics and that is available to them as well."

According to data from Towers Perrin, a human resources firm that provides consulting and other services to Stanford, employees in the United States are paying 56 percent more for health care than they did four years ago and 71 percent more than they did eight years ago. Health care costs for U.S. employers have increased by 63 percent over the last four years and by 87 percent over the last eight years, Towers Perrin reported.

Employees can enroll online seven days a week, 24 hours a day, at http://benefitsu.stanford.edu. Employees also can enroll by telephone by calling 736-2985 or toll free at 877-905-2985. Telephone enrollment hours are 7 a.m. to 5 p.m. Monday through Friday, except for Nov. 7-11 and 14-15, when hours will be extended until 7 p.m. (See telephone service center story on page x.)

This week, BenefitSU will mail a newsletter with full information about benefits offered during 2006 Open Enrollment to the mailing address designated by employees in StanfordYou. Enrollment packages will be sent to employees' mailing addresses closer to Open Enrollment.

Informational sessions are scheduled throughout campus from Oct. 26 through Nov. 15, and benefits fairs will be held in various locations from Nov. 1 to Nov. 4 (see box).

The deadline to enroll online in 2006 plans is midnight PST, Nov. 15. Plan changes will take effect Jan. 1, 2006.