For faculty making health insurance choices in this year's open-enrollment period, the good news was that "managed competition" continues to work to hold down the costs of health insurance at UC. For the third straight year, the University experienced a drop in the aggregate rate charged by its insurance providers; the decrease for 1996 will be about 2 percent (a calculation that excludes the Prudential High Option, where adverse selection and declining enrollment led to a whopping 49 percent increase in non-Medicare rates for 1996.)
The bad news for faculty is that, in managed competition, what is good in the aggregate is not always good for the individual. Thousands of UC employees will, for the first time in 1996, find themselves paying out-of-pocket monthly premiums for their health insurance. The reason for this is that UC pegs its employee health-care contribution to the lowest rate charged by any of its insurance providers. For the past two years, this "benchmark" provider has been Health Net, which in 1995 had more than 43,000 UC enrollees. For 1996, however, the low-cost bidder was PacifiCare, which in 1995 had about 800 UC enrollees. PacifiCare concluded it could provide family insurance to UC employees for $361.60 a month in 1996, while Health Net felt it could go no lower than 1995's rate of $381.43 a month. As a result, UC Health Net family-plan members will be paying $19.43 a month to stay where they are this coming year.
Changes of this sort are precisely the thing that drives managed competition: fearing a flight of members to lower-cost plans, higher-cost plans presumably will feel pressured to keep rates to a minimum during the next bidding period. Yet members of the Academic Senate's University Committee on Faculty Welfare have expressed concerns to UCOP administrators about considerations other than cost that need to be taken into account when a "benchmark" provider is selected. Among these are the number of UC enrollees in such a plan and assurances of the quality of care it will provide.
Michelle French, UC's director of health and welfare benefits, says that both considerations were taken into account in connection with PacifiCare. "It is not a small company," she says. "It is a large company that's been in business for many years and has a substantial market share in California." The reason its number of UC enrollees is so small, she says, is that to date it has only been available at three UC locations (Santa Barbara, Irvine and San Diego); this stands to change now, as in 1996 it will be available at all of UC's California locations.
With respect to quality of care, French says, "Cost is one of the factors but not the only factor we use in assessing health care proposals. We have, in fact, rejected proposals in the past." This issue, she says, can be addressed though certain objective indices of care and through such measures as employee satisfaction surveys.