Over the past year, rising healthcare premiums and prescription drug costs nationwide have sparked concern from the board of trustees as to whether or not the College's health benefits system will be sustainable at current levels of provision. Rapid rate increases for Blue Cross/Blue Shield, the College's health care provider, have suggested that changes need to be made to keep the costs from becoming prohibitive.
Faculty and staff at the College, however, worry that the preoccupation with cutting costs will override the College's commitment to a generous benefit plan for its employees.
"I think the faculty understands the trustees' concern about limiting future cost increases that might impinge upon the College's varied activities," said President Anthony Marx. "At the same time, I think the trustees appreciate that the faculty should not bear the majority of that risk."
The HIRC solicited input and heard the concerns of many members of the Amherst College community. "The recommendations were made after careful consideration of all of the available information," said Physical Plant Assistant Director Dan Campbell, who was on the HIRC committee.
The HIRC also compared the College's current and proposed benefits packages to those of other similar institutions including Harvard and Yale Universities, and Pomona and Swarthmore Colleges. The committee found that the College's benefits still compare favorably with those of other schools, but noted faculty and staff concerns at the beginning of the memo.
"While you want to think about each aspect of the benefit package, you don't want to focus just on one, because some schools will be more generous in some respects and less in others," said Marx. "You need to think about compensation as a whole, which allows for variation in pieces of compensation, that includes the benefits. We are trying to be mindful of that."
One of the biggest sticking points was the date on which changes would take effect for retiring employees. The committee proposed cessation of Medicare part B premium reimbursements, but suggested grandfathering the changes for retiring employees in July 2006. This means that anyone eligible for retirement before then would not be affected by the benefits change. If the retiree were to die before his or her spouse, the spouse would be eligible to purchase coverage at full cost for the rest of his or her life.
Also, the HIRC proposed expanding the sliding scale for cost-sharing to include College employees earning lower salaries. "We believe that this change will provide some incentives for employees to make effective choices," said Kathryn Bryne, director of human resources for the College.
"We need to be concerned about and considerate of those, for instance who are most vulnerable in our community, who can least afford to have particular aspects of their compensation reduced," Marx added.
The recommendations of the HIRC are just one step in the board of trustee's potential decision to make changes to current health benefits. Administrators and the board of trustees have to review the HIRC recommendations and decide upon a course of action. Although almost any decision will be met with some resistance, the recent steps taken by the HIRC mark a significant first step in reaching a solution that suits both the needs of the College and the concerns of its employees.
The faculty convened a special meeting last night to discuss the report. President Tony Marx gave a summary of proposals suggested by the HIRC and the previously mentioned study.
In a statement circulated in August, the board of trustees stated that future increases in health care costs should be contained as much as possible, that "Amherst should remain competitive in compensation to attract future faculty" and that pay raises should be maintained. Although the College would try to absorb as much of the increased costs as it can, they would try to institute measures that can, as Marx stated, "create incentives for informed choice but maintain current level of compensation."
Marx said that there are four driving motivations for a review of the health care plan: 1) the accumulated post-retirement plan's estimated cost rising from $21 million to $26 million since August, 2) the "current rapid expansion of costs of health care," 3) the "lack of incentives that will ensure for all that costs are kept as low as possible to keep the quality of care we all need" and 4) concerns about the possible risk of salary erosion. Concerning the "lack of incentives," he mentioned that measures would be taken to reduce the occurrence of double coverage and the exclusive selection of higher-cost plans.
The current proposals include instituting a co-pay increase from $5 to $10 per medical visit; a co-pay of $35 for emergency room visits; those with individual coverage going from a zero-cost plan to paying 20 percent of medical care costs (which for those belonging to an HMO amounts to $32.09 per month). The comparative study found that Amherst is the only institution amongst its peers that pays the full supplemental cost retirement health care benefits, an estimated $287 per month. In comparison, Williams and Swarthmore pay $187 and $70 per month, respectively. Although Yale and Swarthmore do provide zero-cost options, Marx warned that such plans eradicate incentive for health care choice, as most opt for the zero-cost plan.
"Amherst is fortunate to be able to address this question in this way, where some of our peer institutions are currently in the functional equivalent of financial freefall," said Marx. "It is a great tribute to this institution and particularly to its trustees' discipline of the time that we are not in that situation even though the economy is not healthy at the moment."