Dartblog

Every fall our corporate benefits expert approaches us with the bad news, and each year the conversation is remarkably similar:

“If you want to keep the same level of benefits for your employees and your family, the premium will go up 35%.”

“We can’t afford that.”

“OK. Here is what other carriers are offering, and if you make some changes and cuts, then the increase with this new provider is only 6%.”

“We can live with that.”

Nothing remarkable here. This conversation occurs all over the business world.

Very often companies switch to a new carrier, and employee out-of-pocket items like co-pays and deductibles increase. Under our present plan, the basic co-pay has risen to $15 and the deductible is now $1000.

Very often, but not always. For over a decade now, Dartmouth has stayed with the same carrier, Anthem. Despite being a marquee client, a prestige catch for any insurer, Dartmouth has not pitted competing companies against each other in a serious way. Sounds pretty cozy to me.

The various plans offered by the College to its employees are complicated, but here are some highlights of their expensive generosity:

• An indemnity plan is still offered, something that most employers phased out ages ago. The deductible here is $1,500, but the cost of the various services is not reduced by the usual network discounts (usually 20-30%). Translation: very high costs.
• The best level of the Blue Choice Plan has a $10 co-pay and no deductible at all.
• The top level of the Preferred Blue Plan has a $15 co-pay and only a $250 deducible.

Here’s a statistic that will give you a sense of the savings available to the College in its $125,747,000 benefits budget line (of which medical is easily the major item). As a general rule, if you increase a medical plan’s deducible by $500, you decrease its premiums by 15%. Change the co-pay, too, and you can obtain further savings.

According to a 2008 study by Mercer Consulting, the national median deductible for large corporations is $1,000; only 21% of plans had no deductible. Given the economic downturn, it is a fair estimate that this latter percentage figure has dropped substantially over the past year.

If the College were to move to a $1,000 deducible in its plans, increase the co-pays, phase out the indemnity plan, and shop for the best provider, savings under a new plan would be on the order of tens of millions of dollars each year. And in terms of fairness, the burden of these changes would be spread evenly over all College employees without laying off a soul — in other words, no impact at all on the quality of a Dartmouth education.

Note: For students outraged at these recommendations, before you write to us, please call home first and ask your folks for the details of your own family’s health insurance plan.