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University System of Georgia cuts money for health care

Thousands of employees either will pay more or change insurance plans

POSTED: October 26, 2008 5:01 a.m.
Sara Guevara/The Times

Kathy Martin, right, the personnel benefits coordinator at Gainesville State College, counsels Mary Transue, major gifts officer, about her health care options in response to premium cost increases for state employees.

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More than 11,000 University System of Georgia employees are reconsidering their top-notch health care plans now that the Board of Regents has pulled $20 million from the system’s health insurance program.

The move was part of the Board of Regent’s decision to approve a $136 million budget cut for the state’s 35 colleges and universities. To cut back on spending, the Board of Regents opted for university system employees who are covered by the indemnity insurance plan, the system’s priciest yet most extensive plan, to shoulder more of their own health care costs.

Although Gov. Sonny Perdue called for all public higher education institutions to reconfigure their budgets this summer to absorb a 5 percent cut in state funds, subsequent shortfalls in state revenue led the governor to mandate a 6 percent cut.

John Millsaps, spokesman for the Board of Regents, said rather than asking schools to go back to the drawing board and settle on another 1 percent in cuts, the Board of Regents made a systemwide cut to reduce the amount employers will pay to offset employees’ health care premiums.

"We want to continue to provide (the indemnity) program to employees who feel it’s worthwhile. And we’re going to be able to do that, but it will be at a higher level of cost for the employee share," Millsaps said.

Under the new indemnity plan, a single, childless employee now will fork over about $139 more per month in 2009 than 2008, and the university system will save about $86 in each of those monthly exchanges. Rising health care costs boosted the total cost of coverage $56 per month for that employee to $618 per month.

While financial leaders at North Georgia College & State University and Gainesville State College said they had prepared for the 6 percent state cuts since this summer by leaving many positions vacant, saving on energy costs and making fewer equipment purchases, the Board of Regents didn’t make the budget cut official last week.

The cuts cost Gainesville State College $1.3 million in state funding, which is 3.1 percent of the school’s total budget, according to Paul Glaser, vice president for business and finance at Gainesville State College. At North Georgia College & State University, the cut cost the school $1.7 million in state funds, which accounts for 2.5 percent of the university’s total budget, said university spokeswoman Kate Maine.

"It’s a significant amount both statewide and institutionwide," Glaser said. "A word we’re using around here a lot is, ‘not at this time.’"

Millsaps said the system will save $20 million this year by reducing its health care payments for the indemnity plan that covers 11,138 employees, including a significant number of retirees.

Amy Collins, director of human resources at Gainesville State College, said 101 college employees, or 24 percent, are covered by the indemnity insurance plan. Maine said 37 active employees and 117 retirees of North Georgia College & State University currently use the same plan.

Millsaps said those savings for the university system don’t necessarily equate to employees forking over a collective $20 million. The indemnity insurance plan is the top rung of the health insurance ladder in the university system, followed by the preferred provider option and four other successively smaller health care network coverage plans.

"Recognizing that some people may not want to maintain that program at that higher level, we have made some very detailed efforts in our PPO program to make it a lot more comparable in terms of the benefits offered to the indemnity plan," Millsaps said.

Millsaps said the university system has expanded its preferred provider option plan network so that only 7 percent of the health care providers included in the indemnity plan are not included in the preferred provider option plan.

Anita Turlington, an English professor at Gainesville State College, said in an e-mail that as a married employee, her health insurance premium will double under the university system’s new indemnity pay plan. Turlington would pay $3,504 more in 2009 to maintain the same level of health care coverage.

She said she has yet to determine if she can afford to keep the indemnity plan that offers her maximum flexibility and choice in health care providers.

"I have been hesitant to move to the PPO option because I have heard some horror stories about people who have had to negotiate for long periods of time in order to get insurance coverage for certain tests or procedures," Turlington said. "... I think, though, that I’ll be forced into the PPO plan now because of the much higher monthly cost for the indemnity plan."



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