Every year when we fill out our health care insurance forms, I get the feeling that my health care costs have increased. I could look at the prior year’s payment stubs to see the amounts deducted, but that would not identify hidden increases due to rising co-pays for prescription drugs, office visits and out-of-plan physician consultations. This year, for the first time in many years, the increase in U.S. health care premiums was less than 10 percent. Unfortunately, health care economists believe that this is an aberration and that the annual rate of increase will exceed 10 percent next year and for many years to come.
In fact, the cost of heath care as a percentage of the United States gross national product (GNP) has been increasing progressively, and at a rate higher than that of inflation. This trend shows no signs of abating. If left unchecked, health care costs will exceed the GNP of the United States in less than 40 years. It is not surprising, therefore, that health care insurance premiums also have increased over this same span. However, two factors must be considered. First, health care insurance carriers usually are major insurance firms whose profits are related more to the return on investment than to premiums. They usually invest in stocks and bonds as their major source of revenue. Second, if those covered have increased health care claims, that further reduces the profit margin. To recover from such a shortfall, health care insurance carriers usually increase the premiums charged to their customers and decrease the services they deliver.
Although the cost of health- care delivery has increased markedly, physician salaries have not risen proportionately. In fact, actual health care costs, those that pay for the health care personnel, treatments and upkeep on the physical plant, have increased in line with or slightly above inflation. The major source of these increased health care costs is the administrative services that provide for records, billing, compliance and corporate business planning. We are, in fact, creating our own increased costs though regulation. The University of Pittsburgh faculty and staff are served primarily by UPMC Health Plan. How well are we doing with this plan? Recently, U.S. News and World Report listed the UPMC Health Plan as one of the best health plans in 2005 (http://www.usnews.com/usnews/health/best-health-insurance/topplans.htm). Granted, this honor was for UPMC’s Medicaid Plan, but the overall health plan structure accordingly needs to be fiscally strong for such specific honors to be awarded. Thus, at least on this side of the equation, we probably are in a better position than other universities that have to deal directly with private insurance carriers.
The University Senate interfaces with these services on your behalf. In a recent interview, Professor Herbert Chesler discussed the role the University Senate’s benefits and welfare committee has played through the years regarding your health plan benefits. Until recently, determination of health plan benefits and options was made through negotiations with available third-party carriers, mainly Highmark Blue Cross. Human Resources and the Senate’s benefits and welfare committee would meet and discuss the various options that the proposed plans could have and they collectively would tailor health care plan options for the faculty and staff that would then be offered to us as part of our benefits package.
This loose but collegial relationship changed with the current administration. Approximately six years ago, professional health care accounting consulting was introduced into our program. The health care accounting firm Mercer reviewed all Pitt health care costs, premium options and the like and started presenting a rigorous report annually that defined the optimal health care plan options available, based on real data on Pitt faculty and staff health care resource utilization. Around this same time, UPMC started creating its own insurance product. Simultaneously, the University decided to become self-insured, meaning that Pitt would cover all health care costs, making the choice of UPMC Health Plan an important corporate decision. This increased professionalism across all aspects of the system has resulted in Pitt receiving smaller health care policy premium increases than other Pittsburgh-based corporations. Still, some specific principles have been maintained, which appear to reflect policy, though not specifically articulated as such. Namely, the University aims to cover 80 percent of the usual health care costs associated with health care premiums. Thus, if the cost of these premiums increases, your percentage of that increase will remain the same but the actual amount paid by you will increase. Those increases are dispersed over increased premiums and co-pays. The logic of increasing co-pays is that only those who utilize the services pay for the extra expense. Considering that most co-pays are $15 or less and the health care delivered in Pittsburgh is of a very high quality, these amounts are reasonable for the average employee and his/her family. Unfortunately, chronic or catastrophic disease may make these or any other calculations meaningless. But that is more an issue of federal mandate than corporate support.
Finally, since the University is self-insured, it is in Pitt’s interest that faculty and staff remain healthy. Healthy people have fewer health care problems. In that regard, Human Resources has championed a program called “Fitness for Life.” (See story on page 1.) You schedule an examination by your own doctor, including routine blood screening, and you will receive one month’s free health care premium. The logic here is that screening for blood pressure, lipid profiles and various other markers of illness can allow for remedial treatment before irreversible pathology develops: An ounce of prevention is worth a pound of cure.
Remember, this is our health care plan, our University and our lives. We should all take an active role in them all.
Michael R. Pinsky, professor of critical care medicine in the School of Medicine, is vice president of the University Senate. He can be reached at email@example.com. For more information on the Senate’s benefits and welfare committee, contact Herbert Chesler at firstname.lastname@example.org.