The University of Oklahoma (Norman campus)
Regular session - December 3, 2001 - 3:30 p.m. - Jacobson Faculty Hall 102
office: Jacobson Faculty Hall 206 phone: 325-6789 FAX: 325-6782
e-mail: facsen@ou.edu web site: http://www.ou.edu/admin/facsen/

The Faculty Senate was called to order by Professor Al Schwarzkopf, Chair.

__________________________________________________________________________

TABLE OF CONTENTS

Announcements:

Health benefits

Senate Chair's Report:

__________________________________________________________________________

The Senate Journal for the regular session of November 12, 2001 was approved.

The status of issues brought to the Faculty Senate for 2001-02 is attached. Prof. Schwarzkopf noted that committees were meeting, there is progress on some issues, and the Senate should be able to take action on a number of items in the spring. He said the Senate's recommendation to shorten the "add" period from two weeks to one week (see 11/01 Senate Journal) had been forwarded to the president and would be discussed with student government. Another issue, related to intellectual property, is the appropriateness of publishing old tests online. Having a test file seems to be legal, but publishing that information online is not. When an instructor writes a test, s/he owns the copyright. The Student Information Network has published old tests online, but instructors can request that their tests be removed by filling out a form online.

The regular meetings of the Faculty Senate for spring 2002 will be held at 3:30 p.m. in Jacobson 102 on the following Mondays: January 14, February 11, March 11, April 8, and May 6.

Prof. Schwarzkopf asked Prof. Lee Willinger, Chair of the Faculty Welfare Committee, to report on the results of the health benefits survey that was conducted this fall. In conjunction with that report, Prof. David Carnevale, Chair of the Employment Benefits Committee (EBC), and Mr. Nick Kelly, Benefits Manager, were also present to discuss the status of the benefits contracts.

Prof. Willinger reported that the Faculty Welfare Committee had sent out a survey to faculty and staff that asked for comments about the health plans. Individuals could make both positive and negative comments. The results (below) were very favorable. In general, people on the Norman campus are very satisfied with the current Schaller-Anderson and Blue Cross-Blue Shield situation, with some exceptions. Prof. Willinger and others have already talked with Schaller-Anderson about some problems and will take care of other problems as the year unfolds.

Prof. Greene said it looked like Schaller-Anderson had more complaints, although in section I, it had more positive comments. Prof. Willinger noted that the ratio of people enrolled in Schaller-Anderson compared to Blue Cross was almost two to one. Prof. Magid asked how many of the respondents were faculty and how many were staff. Prof. Willinger said he did not have that information.

Prof. Crawford commented that almost all of the married staff in his unit got their insurance through their spouses because of the high cost. He asked why OU or higher education could not provide a health package to staff that was equal to or better than local companies. Mr. Kelly replied that the University, being self-insured, saves money by eliminating the profit margin. The rates are based on our experience and on our health. In central Oklahoma, everyone is paying about the same for health insurance; it is a matter of how it is paid and who pays. For example, in some organizations, all employees, even single employees, pay a certain amount each month for dependent health insurance. No place in Oklahoma puts as much money into retirement as OU does. Our health insurance costs are due to our demographics. Prof. Carnevale said the focus should be on the entire compensation package in comparison to major employers in the area and to Big 12 universities. For instance, OU pays the full health insurance cost for retirees. Prof. Crawford said he thought that should be better communicated to employees.

Prof. Taylor said she was told that the only imaging clinics approved by Schaller-Anderson were owned by the owner of PPO Oklahoma. She asked whether we could request that a clinic be added to the approved list. Mr. Kelly said the University had negotiated some direct contacts with hospitals, physicians, and facilities. He said he would find out whether the University had any direct contracts with MRI facilities. Prof. Schwarzkopf asked Mr. Kelly to go over the appeal process. Mr. Kelly suggested that employees start with the Schaller-Anderson's customer service center, then the benefits office could try to help. If the dispute is whether something is covered or in-network, the first level of the formal appeal process is a letter written to Schaller-Anderson; the second level of appeal goes to the University administration. That also applies to Blue Cross-Blue Shield. Mr. Kelly said he thought the appeal process had been used only once in the three or four years it had been in existence. Almost every problem is taken care of with the company or benefits office. Prof. Schwarzkopf said he thought the University, not Schaller-Anderson, determined what got paid since we are self-insured. Mr. Kelly replied that the summary plan document lays out what is covered and not covered. The University gets some outside medical advice when there is a dispute over what is medically necessary. Cosmetic surgery, for example, is almost always excluded from the plan and is really not appealable. The University can interpret the plan but not make arbitrary exceptions.

Prof. Magid said it would be useful for the Senate to have a discussion of the economic issues of benefits before the Budget Council and Faculty Welfare Committee made recommendations about salaries. Benefits are a sort of across-the-board compensation because everybody receives the same health care benefits regardless of salary. Prof. Schwarzkopf said Prof. Carnevale could talk about the economic aspects of our benefits. Prof. Milton said the perception was our family benefits were not competitive to schools in the Big 12 and Big 10, and that has a negative impact on hiring.

Prof. Kenderdine asked whether employees opting out created an adverse selection and raised the cost. Mr. Kelly said about 1000 out of about 7600 benefits-eligible employees from the three campuses opt out, and they receive $95 a month as a cash payment. He said he did not know whether those people would contribute more than they would cost us, that is, whether they were more or less healthy than the people enrolled. Prof. Schwarzkopf noted that when the HMO plan was not self-insured, the company was making money because the healthy people enrolled in the HMO. Now the University self-insures its entire population.

Prof. Carnevale pointed out that last year, when the Senate found out about some proposed changes in rates and plan design at the last minute, a subcommittee of the Senate was involved in meetings concerning the transition to the new Schaller-Anderson plan. Some of the problems have been start-up problems such as delayed enrollment cards. One of the things that came out of last year's experience was an agreement that more notice would be given if any changes were being proposed. Also, for the University to manage a plan, it needs to know the numbers. A cost that continues to rise is pharmacy. The numbers suggest that we could have problems this year. There is a list of changes that might be considered to reduce cost. There could be some premium implications. One example is whether people who opt out should get $50 instead of $95. Another example is whether the three-tiered pharmacy plan should be $7, $14, and $35 instead of $7, $14, and $28. Prof. Carnevale assured the Senate that the Employment Benefits Committee would be involved in any changes. He remarked that it is difficult to get the numbers from Blue Cross without paying a fee.

Prof. Greene asked whether he had any hard data comparing OU with the Big 12. Mr. Kelly said the survey shows that our health benefits are very competitive but does not indicate who pays for what. Prof. Schwarzkopf commented that Oklahoma State University is on the state health insurance plan, and those benefits are substantially less than OU's. Prof. Greene asked about potential changes for next year. Prof. Carnevale said the list of negotiable items all represented possible changes. He said he did not know the cost consequences yet. The changes being discussed seem to be fairly minor. He said he wanted to reinforce the idea that compensation and benefits are part of the direct and indirect compensation package, and the employer should be judged on the quality of the package when the Faculty Senate discusses these issues.

Mr. Kelly said he liked to start discussions with the basic philosophies behind any plan changes. Some fundamental principles were followed last year and will be followed this year. The most important one is to protect people who are seriously ill from financial ruin by having out-of-pocket maximums. An unusual feature of our plan is a separate $1500 out-of-pocket maximum on pharmacy costs, which the Faculty Senate requested last year. The second principle is to keep preventive care affordable. Third, employees pay more if they choose something other than the basic things that are covered. A good example is the pharmacy co-pays: $7 for a generic, $14 for a brand name, and $28 for a non-preferred brand name drug. The formulary is based roughly on cost. Mr. Kelly explained that the Blue Cross network and formulary have a little bit wider choice. The financial picture is not as bad as last year but is still fairly grim. We could be looking at as much as a 20 percent increase in premium next year if we did nothing. The University is trying to get better discounts from providers, but that can narrow the choice. OU paid for some of the premium increase as it went from $178 to $205. There are a lot of options with respect to contributions from participants. The drug or other co-pays could change. The deductible could be raised, which spreads the cost over all users. The EBC has been reluctant to change the out-of-pocket maximums or make changes that would drastically affect seriously ill people. The EBC will look at all three areas that contribute money to the plan--providers, employer, and employees--to find a plan that will fit everyone's budget.

Prof. Kenderdine said we could be doing things to keep people from having to use health care. He gave as an example that the University renegotiated its lease with the YMCA, and as a result, University employees lost their discount on Y membership. He said it was almost impossible for faculty and staff to use the Huffman Center, and the programs at the Field House were eliminated. It is difficult for faculty to take part in any wellness activities. Prof. Hart pointed out that consumers sometimes do not have a choice about drugs. In his case, the drug company quit making the generic version. Mr. Kelly said another company might fill that void, but it could take some time. Prof. Lee said he thought the least paid employees should be protected from any premium increases. Prof. Schwarzkopf responded that the only people who actually pay premiums are those who pay for families since the University pays for employees. Prof. Magid observed that one way to graduate the cost would be to make the deductible proportionate to salary, which would put the expenditure on the individual, not on the University. He said he was not proposing that or saying it was good or bad. Because we are getting better data, it is conceivable that the plan administrators could keep track of different levels of deductibles. Mr. Kelly said that idea had a lot of complications. An employee might make $15,000, but his/her spouse could be earning $125,000. Would the deductible have to be based on W2 statements?

Prof. Schwarzkopf asked about the projected deficit. Mr. Kelly said we probably were down about $1.3-1.4 million in the Blue Cross-Blue Shield plan. However, Blue Cross has been paying leftover claims for people who switched to Schaller-Anderson in July. In the Schaller-Anderson plan, we are down roughly $.5 million, although October is always a bad month. The deficit could be around $2 million; however, the data are still so early, it is hard to tell. Prof. Schwarzkopf pointed out that, to put things in perspective, it takes about $1.2 million to give a one percent raise to faculty and staff. Prof. Hart asked whether we had a similar deficit last year. Mr. Kelly said we had about a $2 million deficit in Blue Cross last year, which draws down the health care reserves. We should keep two months of claims in reserve at a minimum. We are to the point where we should not go any lower. The post-employment reserve also is under-funded. Prof. Carnevale remarked that the numbers would be realized only if we did not do something. The goal of the Employment Benefits Committee will be to reduce the cost to the University but not reduce benefits. Prof. Hart said his understanding was that any deficit would come out of the reserve and not the University's general operating budget. Mr. Kelly said that was the case so far. Prof. Schwarzkopf said he hoped to have a better idea of the options early next semester and discuss more proactively how to deal with health insurance and benefits.

Prof. Schwarzkopf said the first legislative visit was held November 13. Six legislators attended. They toured the weather center or genome project, had lunch, and then had a discussion of the economic future of Oklahoma with faculty and students.

Information about the dependent tuition waiver proposal (on the list of issues) that was put together by the Staff Senate is attached to these minutes.

The meeting adjourned at 4:30 p.m. The next regular session of the Senate will be held at 3:30 p.m. on Monday, January 14, 2002, in Jacobson Faculty Hall 102.

____________________________________
Sonya Fallgatter, Administrative Coordinator

____________________________________
James S. Hart, Jr., Secretary