Employees upset with cost containment move by University officials………….“How long can we continue to offer health care coverage when we’re experiencing 20 percent to 30 percent increases on a regular basis?”
Purdue cuts working spouses from 2019 health plan, as employees cry foul
Purdue officials say they’re looking to control health care costs as it slices working spouses from coverage, setting off rounds of complaints from staff and faculty
Dave Bangert | Lafayette Journal & Courier Updated 3:42 p.m. CDT Oct. 16, 2018
WEST LAFAYETTE, Ind. – As Purdue University studies whether to build an on-campus health clinic designed for faculty and staff, campus employees were grumbling this week on word that the university will join a trend of large employers limiting health coverage for employees’ working spouses.
The university’s new health plan – rolled out late last week to faculty and staff, and approved Friday by Purdue’s trustees – will include a 6 percent increase in employee premiums, increased deductibles and out-of-pocket costs, an emphasis on generic prescriptions and new incentives to get physicals and preventative biometrics testing.
And starting Jan. 1, spouses of Purdue employees who are employed by a business, other than Purdue, that covers 50 percent or more of medical premiums will not be eligible for primary health insurance through the university. The plan wasn’t going over well this week on a campus known for its benefits package.
“To me, this amounts to a cut in pay for employees who are in dual-earner families,” said Alice Pawley, an associate professor in the School of Engineering Education. “Benefits are not ‘gravy’ – they are compensation. … People in clerical/service jobs already may be underpaid, but the benefits compensation makes up for the shortfall. They’re also more likely to have partners working in similar hourly positions, and those folks are unlikely to have better health care benefits than people at Purdue.”
Chris Ruhl, senior vice president of strategic initiatives at Purdue, told Purdue trustees on Friday that the spousal exemption was part of a package meant to cut into health care costs that have increased by $30 million since 2014. Ruhl presented data that show that total health care expenses at Purdue climbed from $155.3 million in 2014 to a projected $185.1 million for 2018. Of those figures, employee costs hovered just above $49 million.
“Purdue is behind the curve on this,” Ruhl told Purdue trustees on Friday, referring to the spousal exemption.
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“Our expense as a university is a staggering number in how we care for our people,” said Malcolm DeKryger, a Purdue trustee. “It’s our responsibility. But it’s also, you can’t let it be a runaway train.”
Ruhl said that of the 26,233 employees and family members covered by a Purdue health care plan, roughly 4,800 were spouses. How much the university expected to save by not covering working spouses wasn’t immediately clear.
“We don’t have data on how many of those are covered by other employers,” Ruhl said. “I’ve heard some questions already. I expect we’re about to hear more.”
Ruhl said his office surveyed other large employers in Greater Lafayette and in higher education across the state and found a mixed bag on coverage for working spouses. Indiana University, for example, did not have limited coverage for spouses. Ball State University did.
Scott Walker, president of Greater Lafayette Commerce, said his agency doesn’t have data on spousal exemptions or on specific levels of health care coverage among the member businesses and organizations.
“The one thing we’re hearing from companies,” Walker said, “is: How long can we continue to offer health care coverage when we’re experiencing 20 percent to 30 percent increases on a regular basis?”
Industry surveys tell of a trend on coverage for spouses that picked up steam in the early 2010s.
The Society for Human Resource Management reported in August that, in 2019, 33 percent of large employers planned to impose a surcharge for spouses who can get health coverage through another employer. The average surcharge: $1,200. The Society for Human Resource Management survey said 6 percent of respondents planned to exclude spouses entirely when similar health care coverage is available through another employer.
An International Foundation of Employee Benefit Plans survey in 2018 had 20.1 percent of businesses that responded imposed spousal surcharges or exclusions. That was up from 15.7 percent in 2016.
A 2017 Willis Towers Watson Best Practices in Health Care employer survey showed that 27 percent of companies responding had a spousal surcharge in 2017. Another 5 percent planned to add one in 2018 and another 14 percent were considering a surcharge in 2019.
Ruhl said the exemptions for working spouses, along with the other changes in the 2019 health benefits, weren’t the end of cost-containment efforts.
He told trustees that in 2019, Purdue would look for direct contracts with providers, aiming for three by the end of next year, including one in imaging. He said there were conversations with Purdue’s College of Pharmacy to see whether a campus pharmacy would make financial sense. He said a study continues into whether to build a health care facility for Purdue faculty, staff and students.
“We’ve done a little bit of work on the where,” Ruhl said. “I want us to spend 2019 thinking about the what. So, what services could we offer by Purdue? What services could we offer by preferred private sector partners? What services could stand both students and employees that could create synergies in a joint facility?”
Cheryl Cooky, vice chair of the University Senate, said she’s been fielding concerns from faculty and staff since the spousal exemption was announced late last week. Cooky said the University Senate, a faculty-heavy body, has been pressing the administration for data about claims that Purdue was “an outlier when it comes to providing health care benefits for employed spouses.”
“There was also no data provided that demonstrate the cost savings for the university, and no data that show the projected costs to Purdue families as a result of the loss of such benefits,” Cooky said. “Cost savings for the university should not come at the expense of our faculty and staff, the backbone of the university.”
Doug Samuel, an associate professor of psychological sciences, said the policy would affect he and his wife, an executive with Prudential.
“I think it is quite safe to say that the increased expense to my family will easily outstrip the modest merit raise pool that was allotted this year – and perhaps will eat away at multiple years of merit raises – to say nothing of the fact that these raises already struggle to keep up with the cost of living,” Samuel said.
“There have been multiple steps in the past few years where I worried that fiscal responsibility was getting in the way of attracting and retaining a diverse and modern faculty,” Samuel said. “However, this really takes the cake with regard to the brazen anti-family message.”
Reach Dave Bangert at 765-420-5258 or at dbangert@jconline.com. Follow on Twitter: @davebangert.
Originally Published 1:29 p.m. CDT Oct. 16, 2018
Updated 3:42 p.m. CDT Oct. 16, 2018
