COLUMBUS -- Expensive new drugs and costly new technologies are causing Ohio State to increase the cost of a doctor’s office visit for the first time since 1989.

Premiums for employees enrolled in any of the university’s four health care benefit plans will increase beginning in July by approximately 30 percent, meaning a doctor visit co-pay now at $10 will rise to $15. In addition, office, emergency room visit fees and some other out-of-pocket expenses will increase.

“We’ve done a good job of controlling increases during the past decade, and we will continue to approach the issue with creativity and flexibility, but the rapid and sharp increases in costs during the past year are forcing us to make some changes,” said Larry M. Lewellen, associate vice president for human resources.

“While premiums will increase, the good news for employees is that the university will continue to contribute 85 percent of costs for our most popular plan,” Lewellen said.

To minimize the impact for faculty and staff earning $30,000 or less, Lewellen said the university will issue a premium credit for half of the health plan premium increase (up $150 for an enrolled family). The credit will be applied in its entirety to the August 30 or Sept. 7 paycheck.

“Ohio State must perform a budgetary balancing act for all faculty and staff,” Lewellen said, because funds for benefits and salaries come out of the same budget pool.

“This is expected to be a tight year for the university’s general funds budget. Our work is cut out for us to find the right balance between salaries and benefits that will provide the best advantage to our faculty and staff,” Lewellen said.

Officials say the reasons for the increases are many and diverse. Over the last seven to eight years, there has been a major shift in the way that health care is financed and delivered.

In 1993, 48 percent of employed Americans received health care through a traditional plan and 52 percent were in managed health care, according to Jefferson B. Walters, executive director of OSU Managed Health Care Systems. By 2000, 92 percent had health care through a managed plan and 8 percent through a traditional plan.

“One would think that health care expenses would be under control, but that’s not the case,” Walters said. “Around the country, we are facing the largest health care cost increase in over a decade. Most experts agree that the trend will continue for another five years, at least.”

Walters says the trends affecting the university’s health care plans include:

• New drug development, responsible for 58 percent of the increased costs for the prescription drug plan.
• An older-than-average employee population.
• Increased emergency room usage and other outpatient services.
• A rise in consumerism: Faculty and staff are better educated about health care, have higher expectations and use the system more frequently.
• Introduction of new technologies.
• Governmental legislation regarding health care reform.
• Hospitals and doctors nationally are charging higher fees.

Ohio State offers four medical plans to employees. The plans are self-insured, which means the university pays claims directly rather than paying an insurance company. The plans cover a total of 40,500 people: 18,000 faculty and staff and 22,500 dependents.

The vast majority of the insured (76 percent) are enrolled in the University Prime Care (UPC) plan, an HMO-hybrid which requires people to visit primary-care physicians in the OSU network. The primary care physician makes referrals as needed to specialists and other medical providers.

Three other plans cover the remaining 24 percent of employees. They include Ohio State University Health Plan (OSUHP), a preferred provider organization, 14 percent; Traditional Health Plan (THP), a base hospitalization plus major medical, 7 percent; and the Buckeye Health Plan (BHP), a major medical plan, 3 percent.

“People have had a good experience with the UPC plan,” said Lewellen. “Other than a $10 co-pay and premiums, there are few additional out-of-pocket expenses for UPC subscribers. We’ve worked hard to keep costs down and the result has been a $10 co-pay that will increase for the first time since 1989.”

Compared to other institutions and area employers, Ohio State has met the challenge of keeping costs down while offering a wide range of services. Judith V. Kadja, director of benefits and wellness services, says while many employers reacted to higher health care costs in the late 1980s by reducing benefits, Ohio State’s programs have continued to excel.

“In addition to keeping co-payments and out-of pocket expenses very low, the university also offers coverage for many services such as infertility and hearing aids, that most plans elsewhere won’t cover. And the university offers a Faculty and Staff Wellness Program with innovative programming to help people stay healthy,” says Kadja.

A 25-member university committee, the Health Plan Evaluation Committee, continues to evaluate the medical plans and is working on designs that will provide comprehensive coverage while controlling premiums and out-of-pocket costs in future years.

The new premiums are being announced now so that employees may review their options before an open enrollment period begins in April. Any plan and premium changes are effective July 1.

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