Hartwick College Health Benefits in Higher Education

1. September 2003 HartwickCollegeHealth Benefits in Higher Education Lynne Allen, GBA Upstate New York

2. Agenda • Meet Hartwick College’s Benefit Partner: Marsh & McLennan Companies and Marsh Employee Benefit Services (EBS) • Initial Objectives • Review of Current Plans • Benchmarking of Current Plans • Employee Survey Results • Marketing Project • Plan Options Effective December 1, 2003

3. Meet Marsh & McLennan Companies MMC is a Fortune 500 professional services firm that provides an array of services to all types of clients. ConsultingServices Risk & Insurance Services Investment Management Marsh World’s leading risk & insurance services firm Guy Carpenter, Inc. Leading Global Reinsurance Intermediary Marsh Advantage America Leading provider of associations programs Marsh Risk Capital Originates, structures insurance industry investments globally Mercer Consulting Group Mercer HR Consulting Human Resources, Benefits, Compensation, Communication and Investment Consulting Mercer Management Consulting, Growth & Operations Enhancement NERA Economic and Financial Consulting Lippincott & Margulies Brand Identity and Image Management Putnam Investment, Inc. One of the oldest and largest money management organizations in the U.S.

4. Plan Design Work Day-to-Day Service Legislative Information “Big Picture” Services Program Objective Setting Program Marketing/Implementation Financial Accounting Meet Marsh Employee Benefit Services (EBS) Marsh EBS provides benefit consulting services to numerous private colleges and universities across the country to assist them to provide benefit packages that benefit both the employees and the institutions. One of the biggest challenges that we face with our clients is how to do this while costs are rapidly increasing.

5. What are our Initial Objectives? Like many other Higher Ed institutions, Hartwick College has historically provided a benefit package that would be considered generous by many standards. But…..the cost of healthcare is rising rapidly and straining budgets. Therefore…..we must find ways to provide plan options that will: • Continue to provide comprehensive benefits, • Maintain or improve customer/claim service, and • Contain cost for both members and the college.

6. How will we achieve our objectives? • How do Hartwick’s current plans measure against other plans? We reviewed your plans against other plan (benchmark) data.  • What is important to Hartwick College employees? Rather than make educated guesses, we conducted an Employee Survey.  • What carriers and plans are competitive? We requested proposals from carriers that meet our basic criteria to provide desired plans, provider networks and services at competitive rates.  • We analyzed the benchmark data, the employee survey and the carrier proposals to arrive at a recommendation for the combination of plans that would provide the most cost-effective, comprehensive benefits.

7. Review of Current Medical Plans Hartwick currently offers employees and retirees a choice of 5 medical plans. These 5 plans are offered through BCBS, CDPHP and MVP: • 4 HMO plans, where all benefits must be provided by an in- network provider, and • 1 POS (Point of Service) plan, where in addition to coverage for in- network services, a lower benefit will be paid for out-of- network services within the carrier’s service area.

8. Review of Current Medical Plans The basic elements of all of these plans are similar: • $20 copay for office visits • $50 copay for emergency room visits • No in-network deductibles There are some differences in the provider networks between carriers. There is a significant difference between plans in the total rates charged, and the employee cost share of premium.

9. Review of Current Dental Plans Hartwick currently offers a choice of 2 voluntary dental plans: MVP (Dental Rider) • No deductible • $1,500 annual maximum, benefits paid on a detailed fee schedule Hartwick Plan (self insured) • Pays the first $150 in eligible charges before you pay a $50 deductible, to an annual maximum of $1,000 • This is a very generous benefit, and in the last year, more benefits were paid to claimants than premium payroll deducted from the plan participants. Because the plan is self-insured, the College had to make up the difference between the premium that was payroll deducted and the claims that were paid.

10. Benchmarking of Current Plans - Highlights(using data from 2002 Mercer National Survey of Healthcare Plans) Medical Plan Benefits • All of the Hartwick plans have a $20 office copay, which is in line with the average copays of $15 to $20. • None of the Hartwick plans have deductibles, which is more generous than benchmark plans: all benchmark data shows some form of deductibles (first dollar deductibles, in-hospital deductibles, and/or outpatient deductibles). • Hartwick’s prescription drug copays are lower than the benchmark copays. • Three of Hartwick’s current plans have 2 (Rx) copays (generic and brand), while most plans surveyed have 3 (Rx) copays (generic, preferred brand and non-preferred brand).

11. Benchmarking - Rx Copays

12. Benchmarking of Current Plans - Highlights(using data from 2002 Mercer National Survey of Healthcare Plans) Dental Benefits Deductible • Hartwick’s self-insured plan’s $50 deductible applies after $150 of benefits have been paid, and the MVP plan has no deductible. • Both plans are generous compared to the vast majority of plans that have a $50 deductible. Benefit Maximum • The “standard” benchmark annual benefit maximum is $1,000. Hartwick’s self-insured plan has an annual maximum of $1,000 and the MVP plan has an annual maximum of $1,500. However, the MVP benefits are paid based on a very low fee schedule for each dental service. Under the MVP plan, numerous major services would need to be performed to hit the annual maximum benefit.

13. Results of Web-based Employee Survey 146 employees - approximately 40% of you - responded to the survey! This is an excellent response! • 67% of married respondents indicate that their spouse has benefits available through their employer’s plan. Almost all of those spouses have access to both medical and dental benefits through those plans. • 34% of married respondents have medical coverage through their spouse’s plan. • 25% of married respondents have dental coverage through their spouse’s plan. • Why don’t employees participate in various Hartwick plans? “Have medical and/or dental coverage elsewhere”, “Cost of benefit”, and “No interest” are a few reasons given.

14. Results of Web-based Employee Survey • 65% of you are either somewhat or very satisfied with healthplan benefits. • Reasons that you gave for benefit satisfaction include, in descending order, “benefit meets my needs”, “good value for cost”, and “benefit easy to use”. • The primary reason for benefit dissatisfaction is “not enough value for cost”. • Those of you who responded are almost evenly split regarding willingness to contribute more to receive improved benefits. • If health care costs increase and the College cannot increase contributions: 45% of you would choose to consolidate carriers to offer fewer plan choices, 30% of you would be willing to add a deductible and increase out of pocket expense, and the remaining 25% of you would prefer to maintain current benefits with increased premium cost.

15. Results of Web-based Employee Survey • Employees who would be willing to add a deductible and increased out of pocket expense specified that they would be willing to first, accept an inpatient hospital deductible, then an increased outpatient surgery copay, then, increased Rx copays, and finally, increased 1st dollar deductibles. • Freedom of provider choice is more important to 59% of you, while cost is more important to 41% of you. • 66% of you prefer to receive hospital services at Bassett Healthcare while the remaining 34% prefer to receive hospital services at AO Fox.

16. Final Web-based Employee Survey Results • Across all plans, 77% of you expressed satisfaction rather than dissatisfaction with your selected healthcare plan. • Regarding dental benefits, • 34% of you would like a benefit enhancement for Major Services, • 32% for Basic Services, • 22% for Preventive Services, and • 11% for Ortho Services.

17. Marketing Project - Market Selection How did we select potential carriers to provide your medical benefits? • Carriers must be financially stable. • Carriers must be able to provide benefits, a network of medical providers and a level of service to meet your needs - at a competitive cost. We requested plan proposals to include quotes for current plans and for plan options with deductibles and copays for cost containment.

18. Marketing Project - Market Responses All of your current plans are similar: they are generally enhanced relative to all benchmarks, and their networks are similar. So……..without real plan differences, why offer 5 plans? In addition, why not offer a PPO (Preferred Provider Organization plan): that does not require that you choose a Primary Care Physician, that does not require referrals, that has a national network of providers, and has an out-of-network benefit? The only carrier that was able to present all of the plan options that we requested was BCBS. In addition, BCBS presented the most cost effective rates for comparable plans.

19. Plan Options effective December 1, 2003 Effective December 1, 2003, plan options will change: • BlueCrossBlueShield (BCBS) will be the sole carrier. • The number of plans will decrease from the current five to two: Bassett Plus HMO and Bluecard PPO. • As a method of containing cost, inpatient hospital and outpatient surgery copays will be added to the plan. The College will establish an emergency, no-interest loan program to help those who cannot afford the copay. In addition, copays for prescription drugs will be $5 for generics, $20 for preferred brands, and $35 for non-preferred brands. • There will be two dental plans offered through BCBS.

20. Plan Options effective December 1, 2003 • If you are currently in any health plan other than Bassett Plus and you do not enroll in one of the 2 new plans, you will be automatically defaulted into the PPO plan. If you are currently in a dental plan, you will be automatically defaulted into a corresponding Prime Blue dental plan. • Starting January 1, BCBS will also administer your Flexible Spending Accounts for healthplan expenses and dependent care expenses.

21. Cost and Cost Sharing - Medical Rates The monthly rates effective December 1 are listed below with the college and employee cost sharing amounts for each family status. The college contribution for 2004 is unchanged from 2003. Without making plan changes and consolidating plans with BCBS, the cost for medical benefits would be noticeably higher.

22. Dental Rates An insured dental plan will eliminate The college’s financial liability if dental claims are higher than payroll deductions for premium. Effective December 1, the college will offer employees a choice between two insured plans with differing benefit levels and corresponding difference in payroll deducted rates.

23. Which plan will be best for me? • We are providing information so that you can make an educated decision in two ways: • Attend an information session! • “Health Trends in Higher Ed” - 9/23 and 9/24 • “Understanding your Benefits Package” - 9/30 and 10/1 • “Understanding the BCBS Plans” - Week of 10/13 • “Understanding the Value of the FSA” - Week of 10/13 • Try the online tool: “My Health Plan Advisor” • Learn about the available health plans, estimate out-of-pocket costs, compare premium contributions and benefits, and more. • You will receive your group number and PIN number to gain access through the BCBS web site.

24. Any Questions??