The U’s stance on health care rate increases (table included)

U officials say school can’t take on increased health care costs. (A Gude via Flickr)

In case you missed the link in my story on the union health care rally at the U, below is what the U says about the changes and the Affordable Health Care Act. (A table is at the bottom.)

Also, here’s what MPR’s Catharine Richert reported on the changes back in July.

Here’s the U’s announcement:

Dear UPlan Members,

Federal health care reform, known as the Affordable Care Act (ACA), will fundamentally impact the way employers provide coverage to their employees. For employers, like the University, who provide what the ACA defines as a high value plan, the ACA imposes a tax (often referred to in the media as the “Cadillac or Excise Tax”), on those employers unless changes are made to their plans. Over the past several months, the University has been working to analyze the ACA and its effect on the UPlan. It is important to understand that if left unchanged, the current cost of the UPlan would result in a $48 million excise tax on the University. This is an expense that the University simply cannot take on.

As a result, we have been consulting with advisory and employee groups to explore what specific changes should be made to the UPlan to avoid this significant tax burden. The University’s goals are to offer employees a high quality, affordable plan with choice, and minimize the impact of potential changes on those employees with serious and chronic health conditions.

After much discussion and a thorough analysis, the UPlan’s governing body recommended UPlan changes for 2014, which include:

  • Offering a new Accountable Care Organization (ACO) plan—a new lower cost option with a narrower network. In an ACO Plan, an employee elects to participate in one of four ACOs, with their family, for the full calendar year. The ACO then provides comprehensive health care and ongoing health support for the employee and his/her family for that year. No referrals are required within the ACO, but referrals outside the ACO are rarely permitted. In 2014, ACO options will be available in the Twin Cities, but the ACO Plan will not initially be available in other locations.
  • Increasing copays for primary and specialty care
  • Introducing a small deductible on non-copay items
  • Increasing out-of-pocket expenses in the HSA plan
  • Combining base plans
  • Merging two of the family cost tiers

The proposal, which is being reviewed in collective bargaining currently underway with the University’s labor represented groups, is outlined in the chart at the bottom of this email.

Several people have asked me: “Why are we making the changes in 2014 when the news media reports that the excise tax won’t take effect until 2018?” First, it takes at least 18 months for us to know whether plan changes have worked to move the value of our plan to the required level to avoid the excise tax. By making the changes in 2014, we will know whether any minor additional changes will be required in 2016, so we can address them with University advisory and consulting groups, as well as in the 2016 bargaining cycle. Given that, UPlan changes need to be made in 2014.

We realize that employees are likely to have many questions about the changes so, in addition to our normal Open Enrollment communications, we will be offering in-person campus briefing events about the changes from August through October.

We realize that employees will now be taking on additional out-of-pocket expenses, and we want to make that transition as smooth as possible. The University is currently in the process of identifying options to help mitigate the cost increases. Watch your email for more details to come later this summer.

We also encourage you to take advantage of the premium reductions offered when participating in the University’s Wellness Program as another way to manage your out-of-pocket costs.

While we need to make some changes to avoid the tax impact, we remain committed to offering employees a high quality, affordable plan with choice, and to minimizing the effect of potential changes on those employees with health conditions. We remain confident that the changes being implemented meet that commitment, and that we will continue to have one of the best employer-sponsored plans in the marketplace.

Best Regards,

Kathy Brown

(Please load images) 2014 UPlan Changes.

To download a pdf of the Affordable Care Act and UPlan Changes chart, visit www.umn.edu/ohr/benefits/index.html.