Washburn University Health Plan
September 12, 2005
Mrs. Nancy A. Paul
PO Box 5318
Topeka KS 66605
Dear Mrs. Paul:
I listened to an interesting discussion regarding the Washburn University Health Plan at the September 9, 2005 board meeting. Various board members asked some good questions. Good answers were not forthcoming from the administration.
The audited Washburn University financial statements for the year ended June 30, 2004 contains some information regarding the university's self-insured health plan. On the statement of Net Assets, the expendable amount of restricted net assets for the self-insured health plan were listed as follows:
- 2003 $ 594,422
- 2004 $1,445,811
The plan balance increased $851,389 in 2004. President Farley indicated that the fund balance is now at $2.5 - $2.7 million. This would indicate that the fund balance increased another $1.0 million during 2005.
While the employees are led to believe that good claim history is responsible for the lack of premium increases for the second year in a row, it may be more correct to attribute the high fund balances to overcharging the Washburn University employees for health care coverage. At an annual growth rate of $1.0 million, when will the university have enough in reserves to provide for a premium rate decrease to the employees? Or will the university continue to charge employees, as it does its students, based upon what the market will bear?
It is challenging to compare health coverage between employers, given the various plan options. For example, the State of Kansas offers six different plan options. Comparing Washburn University's plan to the Kansas health plan with the most comparable premiums shows the following results:
| KS Premium | KS Staff Pays | WU Premium | WU Staff Pays | |
|---|---|---|---|---|
| Single | $ 380.92 | $ 68.10 | $ 353.24 | $ 0.00 |
| EE+Children | $ 685.66 | $276.26 | $ 693.38 | $230.38 |
| EE+Spouse | $ 761.84 | $328.30 | $ 758.91 | $295.91 |
| Family | $1,066.54 | $536.44 | $1,094.08 | $631.08 |
It appears that there is some significant room to give employees with family coverage a better rate on their health insurance costs without jeopardizing the security of the entire health care plan.
A review of the budget documents indicates that there are at least 52 employees that earn less than $22,822 annually, with 19 of these employees in the collective bargaining unit employed as custodial and food service workers. The other employees are retail clerks, secretaries and other support staff. A comparison of Washburn University with the State of Kansas' earning brackets for additional assistance follows:
| State of Kansas | Washburn University |
|---|---|
| Earnings < $25,000 | Earnings < $22,822 |
| $25,000 - $44,500 | $22,822 - $29,744 |
| Earnings > $44,500 | $29,745 - $36,774 |
| $36,775 - $44,021 | |
| $44,022 - $50,943 | |
| Earnings > $50,943 |
Again, it may be possible to broaden the earnings brackets to provide additional assistance to those most in need.
It was disappointing to see President Farley respond so poorly to the questions asked by the various Board members. Although it is a complex area, certainly a man of his caliber should be prepared to answer the most basic question regarding how the claims paid out compared to premiums paid in. His responses seemed rather vague, perhaps his attempt to avoid a real discussion regarding the appropriate funding level of the health plan. Hopefully the board will continue this discussion with him until he is more responsive to the questions asked of him.
Meanwhile, one might consider that this excess funding of the health plan is consistent with President Farley's refusal to support University retirement contributions on summer school pay at a cost of less than $100,000. Perhaps the faculty and staff should be informed that they are already contributing to the university's welfare without needing to sign up for the Annual Giving campaign.
Sincerely,
Mary Lou Herring