2011 Purdue Health Plans Senate Presentation

1. 2011 Purdue Health Plans Senate Presentation October 7, 2010

2. Health Care Trends • Nationally, health care costs are expected to rise 8% or more. [www.indystar.com/article/201009300245/business03/9300428] • Nationally, workers are expected to pay average premiums of $2,209 in 2011. This is an increase of 12.4%. • Indiana employers are seeing premium increases of 10-13%. • Nationally, the average premiums that employers pay on behalf of each worker expected to rise nearly 9% to $7,612. • Employers are replacing co-pays with coinsurance for all services including prescriptions, office visits, and urgent care. • Major consulting firms expect costs to rise by 9% for 2011 after a 9.5% increase this year. Other state schools are making adjustments to benefits • One state school’s deductible increased 50% on their PPO plan. Coinsurance percent rose from 25% to 30%. Prescription drug deductible and insurance increased along with the maximum out-of-pocket on prescriptions increasing from $1,000 to $1,500.

3. Purdue Strategies to Manage Health Care Costs • Health Plan Advisory Committee Discussions • Strategies shared under consideration but not yet implemented: • Spousal surcharge if the spouse had access to other employer provided coverage • Surcharge for smokers • Charging for the number of dependent children covered • 30-day waiting period for benefit eligibility • Merging the Purdue Incentive and Co-Pay Plans with corresponding plan changes • Incentives and disincentives for participation in health improvement programs • Multiple salary tiers for setting employee premiums • Possible new networks and programs through providers like Clarian, American Health Network, etc. • Blue Ribbon Healthcare Committee • Established to recommend short-term and long-term changes to achieve both immediate and longer-term cost containment • Feasibility of an on-site pharmacy/medical clinic • Benefit plan design, including plan design strategies • Health improvement programs for Purdue faculty, staff, and families

4. Blue Ribbon Healthcare Committee Charge: Focus on health care containment for the long term while continuing to provide high quality care to Purdue employees and eligible dependents. • Pam Aaltonen, Nursing (Chair) • Steve Abel, Pharmacy Practice • John Beelke, Human Resources-Staff Benefits • Bart Collins, Health Communications • Mike Campion, Management • Jenny Coddington, Nursing; North Central Nursing Clinics • Jim Dworkin, Regional Representative, North Central • Joan Fulton, University Senate – Chair (Agricultural Economics) • Luis Lewin, Human Resources • Carol Sternberger, Nursing; Regional Representative, Ft. Wayne • Philip Troped, Health & Kinesiology • Susan White, Pharmacy • David Williams, Senate: Faculty Affairs Chair (Med Illust/Vet Med) • Steve Witz, Regenstrief Center Recommendations Due by March 1, 2011

5. Current Programs • All Purdue medical plans are self-insured and administered by CIGNA. There are 3 options: • Purdue Choice Fund is a consumer-driven health plan. Enrollment:1,023 employees • Incentive PPOplan is a preferred provider plan. Enrollment: 4,201 employees • Co-Pay plan is a plan with HMO benefits featuring co-pays for all services, including inpatient and outpatient hospital treatment. Enrollment: 6,113 employees Purdue has a total of 11,337 employees covered by these plans, including 14,663 dependents for a total of 26,000 lives.

6. Current Programs • Expected cost for 2010 • Total Cost = $132.3 million (3rd largest budget) • Purdue Contributions = $115 million (87%) • Employee Contributions = $14.1 million (11%) [pre-tax basis] • Other * Contributions = $3.2 million (2%) *disabled, former employees and pre-65 retirees • Claims expenses for medical and pharmacy for 2010 are expected to be at $127 million. Other plan expenses include vision claims, CIGNA fees, COBRA fees, and some staff costs.

7. Medical Budget Projection

8. Proposed 2011 Plan Changes • Eliminate providing money in the form of an opt out credit to those who do not take Purdue’s medical benefits. • Part-time faculty and staff will have their premiums based on their full-time equivalent salaries beginning with 2011. • Purdue’s contribution will increase by 6% and employee premiums (overall) will increase by 6%. • Salary tier for faculty/staff premiums will go from $40,000 to $44,000. • Premiums based on salary will only change on January 1, and not with other salary changes during the year. • Dependents up to age 26 will be covered as required by law.

9. Preventive/Wellness Coverage will be enhanced These services will be covered without limits at 100% when in-network providers are used for all three medical plans. • Annual Physical Examinations • Preventive imaging services: e.g., mammograms and osteoporosis screening • Immunizations for infant, child, adolescent, and adult • Preventive laboratory services: e.g., cholesterol, pap tests, and PSAs • Screening procedures: e.g., colonoscopies

10. Proposed 2011 plans Purdue Choice Fund: no changes • In-network deductible:  $1,300 per person per year and $2,600 per family per year • Out-of-network deductible: $2,600 per person per year and $4,600 per family per year • Coinsurance after deductible: 20% in-network and 50% out-of-network • Preventive services: 100%, not subject to deductible • Purdue HSA contribution: $650/employee and $1,300/family

11. Proposed 2011 plans Incentive PPO plan changes to current benefits: • Deductible: Current is $400; Proposed is $500 • Coinsurance for primary care: Current is 10%; Proposed is 15% (still not subject to deductible) • Maximum out of pocket: Current is $1,800; Proposed is $2,000 per person per year and $4,000 per family per year • Pharmacy maximum out of pocket: Current is $1,000; Proposed is $1,300 per person per year and $2,600 per family per year

12. Proposed 2011 plans Co-Pay plan changes to current benefits • Establish a $250 deductible • Establish a 15% coinsurance • Both deductible and coinsurance for inpatient and outpatient hospital services only • Maximum out of pocket of $1,200 per person per year and $2,400 per family per year • Pharmacy maximum out of pocket: Increased from $1,000 to $1,300 per person per year and $2,600 per family per year

13. 2011 Purdue Health PlansSenate Presentation Q & A’s October 7, 2010