System amps up pilot effort

The state legislature took the first step Tuesday toward granting the UNC system authority to establish its own employee health plan separate from the state’s existing program.

UNC officials hope to create an initiative to provide greater coverage options and reduce premium costs for university employees and their families.

“We hope to have three or four choices that employees can select,” said Leslie Winner, UNC-system vice president for human resources. “Being able to offer this range of choices is one of the big benefits of doing this.”

A bill drafted by the UNC-system Office of the President and introduced Tuesday by Sen. Tony Rand, D-Cumberland, would allow the university to explore different health care providers, establish its own premium rates and deductibles and create programs for preventative care and disease management.

Winner said a study by Hewitt Associates, a worldwide human resources consulting firm, prompted university officials to press for a break with North Carolina’s state employee health plan.

“What we realized is that our health care benefit really is among the worst in the country,” she said.

The study found that state employees in North Carolina have been paying significantly more in out-of-pocket expenses than employees with similar coverage in other states, Winner said.

“Seeing that study in black and white was a motivation to take a look at this.”

One of the most significant concerns for the university has been the cost that members of the state plan pay for coverage of spouses and dependents. Administrators on campuses across the system have complained that the comparatively high price for dependent coverage — about $427 a month — makes it difficult to hire and retain top-notch faculty.

“The universities have the same issue that many agencies in state government have, and that is recruitment,” said Ginny Klarman, manager of compliance and member services for the State Health Plan.

“Their argument is that many university professors coming from other states can find jobs in other universities and pay far less for dependent coverage.”

Winner said reducing the cost of that coverage would be a priority of the UNC-system’s pilot initiative.

“All we can say is that we can guarantee the dependent coverage will cost no more than it costs under the state plan,” she said. “Hopefully, it will cost less, and the coverage will be better.”

Klarman said the university would face significant challenges in successfully implementing its own plan, but certain advantages could make cost savings possible.

For starters, she noted, the UNC-system’s pilot program would not include retired employees, leaving them to continue relying on the existing state health plan.

Because retirees are among the most expensive members of the health plan, omitting them from the university’s initial pilot would allow for significant savings.

“I think that, in the future, (the system is) going to have to look at what they’re going to do with their retirees,” Klarman said, adding that employees who retire after switching to the pilot program certainly will want to remain with the university plan if it proves successful.

Winner said retirees will be studied once the system’s initiative is underway.

If approved by the General Assembly, the program will launch in July of 2006.

Contact the State & National Editor at stntdesk@unc.edu.