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Rising Costs Prompt Increases in USG Health Care Plan

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USG Contract Mirrors National Trend of Escalating Costs

Atlanta — May 10, 2000

Responding to escalating health care charges associated with its Blue Cross/Blue Shield Health Benefits Plan, the Board of Regents today approved health care premium increases that will impact both the University System of Georgia and its employees.

The Board of Regents approved a 17.4 percent increase in the employer-paid portion of the indemnity plans premiums, which will go into effect on July 1. The board also approved a two-tiered phase in of an employee premium increase, the first phase of which will be implemented on August 1, when participants in the plan will see a 15 percent increase in their premiums. Another employee increase, as yet undetermined, will be implemented in January 2001. The approved 15 percent increase is slightly higher than the 12 percent increase charged to indemnity plan participants last year.

The combined increases are necessary to help offset continually rising health care charges that have surpassed the plan’s projected claims and administrative costs (the cost of the contract to administer the plan). Between July 1998 and December 1999, claims exceeded the amount of premiums collected during that 18-month period, until USG campus officials made additional payments into the fund to cover depleted reserves. In March of this year, the Health Benefits Plan also received a supplemental appropriation from the legislature of $33 million to cover the deficit for the remainder of Fiscal Year 2000. The plan is now projected to complete the fiscal year with less than the minimum two months reserve considered prudent, and costs continue to rise. The increased premiums will cover these increased costs.

In November of this year, during the University System’s annual open enrollment period for health care plan selection, participants will be able to opt out of their existing indemnity or health maintenance organization (HMO) plan. At that time, indemnity plan participants or HMO participants may exercise one of several options. They may remain with their current provider, select the indemnity plan, choose from several existing HMO plans provided for University

System of Georgia employees or they may sign up for a soon-to-be-announced new preferred provider plan. The Preferred Provider Organization (PPO) option is being negotiated by the Department of Community Health, on behalf of the Board of Regents.

“We are implementing these increases in a manner that reflects sensitivity to their impact on employees budgets,” said Dr. Lindsay Desrochers, senior vice chancellor for capital resources for the Board of Regents. “By saving the second phase of the increase for January, employees will have an opportunity to select a more economical option to meet their needs, while maintaining quality health care coverage.”

As of August 1, employees with “Single” coverage in the Blue Cross/Blue Shield Self Insured Indemnity Plan, will see their rates change by $7.30 monthly, from $48.70 per month to $56.00 monthly. The employer contribution also increased correspondingly, to $187.72 monthly, up from $159.90.

Employees carrying “Single +1” coverage will see their premiums increase by $15.22 monthly, from $101.50 to $116.72. The employer contribution will move from $333.40 to $391.42, to cover rising costs.

USG employees with “Family” coverage will see new premiums charges of $136.40 monthly, up from $118.60, a difference of $17.80. The employer portion of the coverage will jump to $457.50, up from $389.70.

“Health care is an important incentive for attracting and retaining high quality faculty and staff,” stated Desrochers. “And while the University System, given its demographics, has a somewhat better utilization rate than many employers, health care costs are rising significantly for all organizations. We are diligently working towards affordable options for all employees in order to ensure this important employee benefit.”

Desrochers and other University System officials have said they expect the new Blue Cross/Blue Shield premiums to prompt many employees to select one of the existing HMOs or the new PPO plan to minimize their health care costs. “The indemnity plan is the University System’s top-shelf program, and it will remain available for those who wish to maintain optimal choice in their health care plan,” she stated. “But those who continue to utilize this plan must do so with the recognition that the costs have gone up and continue to go up dramatically.”

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