Health Insurance: an increasing expense

May 1, 2014 | 11 a.m.

Health benefits protect employees, impact tuition pricing

News | Michael Urch

To some in the general student population, the faculty health benefits may seem irrelevant. Therefore, reading an article about them may not seem to be worth the time. Hopefully it is understood that a change in health benefits expenses can impact tuition pricing.

Randy Bergen, executive assistant to Jay Barnes, named health insurance as one of the largest increasing expenses at Bethel, an expense that needs to be offset by an increase in revenue. Health-related expenses for the university are expected to rise 10 percent in the next year.

Similar to other institutions of its size and purpose, Bethel self-insures for its health benefits. Self-insurance means that Bethel hires a company that uses actuaries to predict the number of Bethel employees who will need to use their health insurance. Then Bethel sets aside enough money to cover any loss claims.

Self-insuring allows Bethel to save money on taxes, and Bethel also saves money by not paying insurance to cover the health expenses. However, self-insurance means that Bethel retains the risk instead of transferring it to an insurance company.

Unfortunately, in recent years, Bethel has received “excessive” claims; many more employees have needed to use their insurance than the actuaries anticipated. This has lead to increased health expenses.

“Rising healthcare costs have to do with the large amounts of claim,” Director of Human Resources Kara Wald said. “Despite the fact that we have used our very best work with our brokers, claims have been coming in higher than expected.”

Even though “excessive” claims are unfortunate, it is important to realize that behind each claim is an employee facing health needs. This is about more than the increase in costs for Bethel; health benefits impact the well-being of Bethel employees.

Chuck Hannema, a finance professor, had a physical done when he turned 50 in 2006. His decision to go to a physical was merely because of the life checkpoint.

“I would not have pursued the physical at 50 if not for the health insurance,” Hannema said.

Hannema was diagnosed with prostate cancer. The medical bill was $55,000, and without the treatment, he would not be here today. He would have been unaware of his cancer and unable to pay for treatment without the health insurance.

“Being able to pursue care without concern about my ability to pay led me to a cure and to life today,” he said.

If Hannema retires at 66, he will have put 20 years into working at Bethel. This would be 20 years of him paying into the health plan, and 20 years of him adding value to Bethel. Health insurance is an important benefit for Bethel to offer to employees.

Regardless of its importance, having a higher than expected number of claims leads to a questioning of the underlying assumptions behind health insurance, and this is exactly what Bethel is doing.

“We are trying to get a handle of our healthcare costs so that we can model more correctly for the future—both for the university and for our employees,” Wald said.

“I can speak for President Barnes: the salaries and benefits focus is one of our top focuses as we head into the next budget year."


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