Washburn University Board of Regents Meeting
September 7, 2007
Agenda Item No V.B.2. – University Health Plan Renewal (pdf)
The Agenda Item for the University Health Plan Renewal contains very little information for Board members to use in order to make an informed decision. Since this action item impacts virtually the entire work force at Washburn University, each Board member should give deliberate consideration to what is being voted upon.
BENEFITS COMMITTEE
It would be good to know who serves on the Benefits Committee and how the various employee groups are represented on this committee. Also, I’m sure the consultant has a name and company that could be shared.
COST of PROPOSED RATE INCREASE
What is the cost to the employees and to Washburn University of this proposed increase? It appears that the 5% increase for the additional premium was included in the FY 08 operating budget before the usage during the rating period was known. That seems to beg the question – did the administration simply decide it was time for a 5% increase, or does the claim experience actually support the increase?
INSURANCE RESERVE BALANCE
The Health Self Insurance fund is reported on page 15 of Fund 8 in the university’s annual financial report. The balance at the end of FY 06 was $3,188,993. This fund balance increased by almost $1.0 million in FY 05, and by almost $0.6 million in FY 06.
The ideal balance of the self-insurance reserve has not been determined by the Board. Apparently that issue has inappropriately fallen, by default, to the Benefits Committee within the premium setting process.
FIDUCIARY DUTY – REINVEST INVESTMENT EARNINGS
Some discussion is in order regarding the return of investment earnings into this fund. This reserve fund is a restricted account, with some fiduciary duties to the employees who provide significant funds for this benefit. Even at a modest rate, the investment earnings alone would call into question whether a 5% rate increase is appropriate.
EMPLOYEE WELLNESS PROGRAM
On November 11, 2005, the WU Board of Regents approved implementation of the Employee Wellness Program during FY 06. The FY 08 budget includes over $90,000 for this program. The program documentation submitted to the Board in 2005 included discussion of cost savings (savings that would ultimately exceed the program costs), and discussion of a three tier incentive program, with reduction in employee’s annual health insurance premium being a part of each tier. Promises were made that results of this program could be quantified. A timely report on the effectiveness of this program would be appropriate when considering health insurance premium changes.
GREED
It seems that the administration’s recommendations to increase rates, because they can, are always endorsed by the Board, with very few questions asked. It would be good to see the administration put some work into its recommendations by providing legitimate, documented support for the proposed increase.