Faced with budget cuts and multiplying costs of employee health
care, the University is preparing to overhaul its health-benefit
system for the first time since 1988.
Beginning Jan. 1, all faculty and staff who had previously gone
without paying co-premiums on University-provided health care plans
such as M-CARE will have to pay 5 percent of their monthly rates.
The University will pick up the remaining 95 percent.
Although about 70 percent of University employees, including
some 6,000 retirees, already pick up a portion of their health care
charges, this is the first time all workers – from professors to
operating engineers – will be obligated to pay out of their own
“All of the (health care) plans we offer face the same
challenges – increasing costs,” University spokeswoman Julie
Peterson said. “These issues have been under consideration for some
According to a written statement released by the Office of the
Provost, health care costs incurred by the University jumped 17
percent from 2002 to 2003, and have doubled since 1998. Over the
same time period, the University increased its share of
The cost-sharing strategy, which Provost Paul Courant announced
last April, casts a net many years into the future, Peterson said.
By 2005, the University plans to make employees responsible for 15
percent of their premiums. For long-term resolutions, University
officials said a committee of faculty and staff will seek to design
optimal premiums by surveying health care plans of other
“We did look at some other universities. We also looked at some
large private sector employers in the area and how they deal with
their salaries,” said Richard Hirth, a committee member and
associate health management and policy professor. “A lot of
universities have already gone to a graduated premium contribution
… to a greater extent that Michigan has.”
For example, Comprehensive Healthcare Insurance Plans – major
health care plans for faculty and staff of the University of Iowa –
require customers to pay 10 to 20 percent of their premiums.
Employees at Northwestern University also foot part of the bill for
their health insurance.
“For single-person coverage, we found employee contributions
ranging from zero to as much as 56 percent of the premium cost,”
said University Human Resources spokesman Dave Reid. “For family
coverage, faculty and staff, contributions went as high as 60
percent for some plans.”
Despite the relative cost-efficiency of University health care,
some faculty members – particularly graduate employees – have
expressed dismay over the policy changes. This year, graduate
faculty will have to shoulder the higher premiums along with
historically low pay raises.
“We’re among the lowest-paid employees of the University,” said
Graduate Employee Organization President David Dobbie. “It’s
definitely unfair to burden us to pay health care costs.”
Since 1999, salaries for graduate student instructors have
decreased 1.5 percent, according to Dobbie and the organization’s
In addition to low pay raises, Dobbie said forcing graduate
faculty to foot the cost of health care violates their
“Our health care benefits are bargained, so if the University
wants to change our benefits, that’s the equivalent of saying they
won’t respond to bargaining.”
But Peterson said the University will not breach staff and
faculty contracts. If the policy changes come into conflict with
labor contracts, the University will enter into collective
bargaining with employees.
“We would renegotiate when the contract expired,” Peterson said,
adding that she does not believe the current policy changes violate
graduate faculty members’ contracts.
Citing modest pay raises for all University employees, Peterson
said faculty and staff subscribing to University health care will
feel the effects of sluggish salaries and ratcheted premiums.
“Salary increases are very restricted this year,” she said. “The
only comfort I think we can offer is that everyone, everywhere, is
in the same boat.”
According to the Associated Press, health care premiums have
seen their highest increases since 1990, and this year portions of
family health plans paid by employees grew 12.9 percent