Passed by the Assembly on 13 December, 2004
Resolution to avoid increases in required
employees' health insurance contributions
in the 2005-07 biennial budget
The UW-Madison Academic Staff Assembly asks the Governor and the State Legislature to avoid increases in required employee contributions to state group health insurance during the 2005-07 biennium. Maintaining high quality health care at minimal cost to employees is vital to retaining our best employees and to attracting new employees in a competitive market. This is particularly important given the current context in which salaries have lagged behind those of peer institutions.
The Assembly endorses and supports the recent innovative steps taken by the Group Insurance Board and the Governor to provide quality health care at a more reasonable cost to state government, beyond simply shifting costs to the employees. The Assembly commends Employee Trust Fund staff for successfully implementing the three-tier contribution structure and establishing a pharmacy benefit manager, as approved by the Group Insurance Board.
Explanation
The UW-Madison Academic Staff Assembly notes the following:
- UW System unclassified employees contribute approximately 5% of the total premium if they select a plan in Tier 1, 10% of the total premium if they select a plan in Tier 2, and about 13% if they select the state standard plan.
- In calendar year 2005, employee contributions to Tier 1 plans are scheduled to increase by 22 percent (from $18 to $22 per month for single coverage and from $45 to $55 per month for family coverage). Employee contributions to Tier 2 plans will increase by 6 percent (from $47 to $50 for per month for single coverage and from $117.50 to $125 per month for family coverage). The contribution rates for selecting the standard plan remain unchanged at $100 per month for single coverage and $250 per month for family coverage.
- State health insurance premiums are projected to rise just 5% for
2005, far below the predicted increase of 10 to 12% and below the national
average of 12.5%.
1. According to the ETF, a major factor behind the lower than expected premium rate increases was the decision to carve out the prescription drug benefit and select a Wisconsin-based Pharmacy Benefit Manager (PBM) to provide pharmacy benefit services to the program's approximately 230,000 members.2. A three-tier premium contribution structure for state employees replaced the former system on January 1, 2004. According to the ETF, this new approach enhanced the Group Insurance Board's ability to negotiate more effectively with the health plans; which resulted in over $14 million in savings this year.
- While health insurance costs to the state in 2005 will increase by
approximately 5 percent as noted above, employee contributions
in the Tier 1 plans are scheduled to increase by 22 percent, as noted
above. We predict these increased employee contributions will result
in savings that will accrue to the state, thereby continuing to shift
cost to the employees.