As of Jan. 1, Priority Health once again provides health insurance for Hillsdale College faculty and staff after spending on claims increased by $1 million last year.
Following a two-year hiatus from Priority, Hillsdale left Blue Cross Blue Shield of Michigan to consolidate two plans for in-state and out-of-state employees. The move will avoid a nearly 28 percent increase in health care spending next year in preference to a 12 percent rise.
Hillsdale is working toward implementing a wellness initiative for its employees in order to keep them healthy and costs low, as well.
“Priority, they’re a 300-pound gorilla like Blue Cross Blue Shield in Michigan,” Chief Administrative Officer Rich Péwé said. “They’ve been very competitive with rates.”
Last year had a larger-than-normal number of individuals with serious illnesses and unexpected surgeries — creating costs that surpassed employees’ out-of-pocket maximums.
“We had a bigger number of those,” Péwé said. “We were using up our fully insured portion quite a bit.”
In combination with the rising number of expenditures, discovery of BCBS underwriting the college in its favor made for a perfect storm. While the two plans bundled would have cost almost 28 percent more for this year, in 2017 it could have experienced up to a 47 percent increase in expenses. The plan for in-state employees would have increased by almost 60 percent.
“It would have been really unaffordable across the board to stay with Blue Cross Blue Shield,” Péwé said. “We saw the writing on the wall.”
Péwé said he did not know if the underwriting was a deal to gain the college’s business or a miscalculation in projection.
BCBS provided a statement: “We valued our relationship with the college, but unfortunately their cost for medical services was significantly higher than the premiums, and the parties could not come to an agreement for 2016.”
Finding a less expensive alternative, the college opted to change its provider to Priority to pay approximately $430,000 per year more verses BCBS’s increase of $950,000.
Instead of having one health insurance plan for in-state employees and one for out-of-state workers, the college consolidated to serve both groups into the point-of-service plan.
The POS plan is similar to the preferred provider organization service Hillsdale held under BCBS. More universal than the health maintenance organization plan — the second under BCBS, which can only be used for those in Michigan — the POS plan services college employees across the United States.
The Priority plan allows employees on campus to go to most of the local clinics around Hillsdale, Michigan, including Hillsdale Hospital and Cleveland Clinic. It also covers the hospital at the University of Michigan, which was added to the network within the past two years. Priority not covering treatment at the University of Michigan was a factor in the college leaving their service originally.
The POS plan also requires employees to have a primary care physician and go to places within the Private Health Care Systems network or they might have to pay a higher amount. This especially concerns those in metropolitan areas where a larger market means less pressure to join the Priority web.
“Some of that is definitely an issue,” Péwé said. “We’re always very concerned about that and working with our broker and working with Priority Health to make sure we reach out to those places to see if they want to be a part of the network so that people don’t have to make a switch.”
As for the college faculty and staff, their premiums may experience an increase, but their deductible and out-of-pocket payments could decrease. Instead of out-of-pocket being $4,000 a year for an individual, it will be $3,000 with a deductible of $2,000. For a two-person household or a family of four, the out-of-pocket costs will decrease from $8,000 to $6,000 with a deductible of $4,000.
“People that were in the HMO plan, they had a really high out-of-pocket before,” Péwé said. “This is actually better.”
With the increased health care expenses over the year overall, however, the college is looking to promote wellness among its employees, Péwé said.
“We’re going to have to be more aggressive with bringing on a wellness program to try to improve our spending, try to get it going in the other direction,” Péwé said.
In particular, this means identifying signs of serious illnesses before they become chronic. The college would give employees who participate in the program a period of time to go to their doctor and have tests run to look at blood pressure, blood sugar, and other risk factors. Doing so could affect workers’ premiums.
“Paying attention to that with their physician, it could make a difference,” Péwé said. “We haven’t done that before, and we’re probably long overdue in doing that.”
College Nurse Carol Drews said healthier workers mean lower health care costs.
“Wellness employees have less absences,” Drews said. “Insurance costs come down. It’s just a win-win.”
Plenty of opportunities exist for workers on campus to stay active. Faculty and staff, like students, have access to the Roche Sports Complex and Biermann Center with their ID. Over the summer, employees can take a full-hour lunch if they use it to workout, Aide to the Athletic Director Anita Gordon said.
The goal of the wellness initiative is to further promote that healthy lifestyle.
“I’m looking forward to see what the wellness program will look like,” Drews said. “I think that’s what our health care lacks. If we could focus on immunizations, stress, healthy eating, I think we would spend less on health care.”
This story was updated Feb. 8 at 9:14 a.m. to reflect a later comment received from BCBS.