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(UI Benefits Office)
Office of the President
Funded Retirement and Insurance Committee Minutes March 4 , 2011, 11:30 am 302 USB
Members present: Nancy Davin, Jon Garfinkel, Matthew Glasson, George Herbert, Daniel Katz, Sheldon Kurtz, Heather Schnoebelen, Bernard Sorofman, Victoria Sharp, Katherine Tachau, Anand Vijh, Lynn Vining, Dagong Wang, Michael Wichman
Members absent: None
Administration: Sue Buckley, Richard Saunders
Guests present: Carla Clark, Carol Fethke, Dan Fick, Debra Hughes, Glenn Kell, Susan Klatt, Amber Goedken, Joni Troester, and Nancy Williams
1. First, the introductions were done. Next, the minutes of February 4, 2011, meeting was approved.
2. The discussion started with weight loss medications, a topic on which Amber Goedken, a Ph.D. student in pharmacy, had made a presentation during the last meeting in February 2011. She informed the committee that such medicines are ineffective, expensive, and sometimes unsafe. Daniel Katz and Richard Saunders subsequently held discussions with members of bariatric surgery department, who echoed this view. Given the overweight problem in U.S.A. and the increasing awareness of this issue, bariatric surgeons have been busy. Sometimes they receive inquiries from people who are only 20 lbs overweight. However, surgeries are typically performed on people who are at least 100 lbs overweight. The bariatric surgeons hold the opinion that while weight-loss medications are ineffective, simple antidepressants can also help. They believe that psychological counseling and behavioral modification may be the best solution.
Joni Troester, Sr. Asst. Director, Human Resources, was present at the meeting as a guest. She informed the committee that the UI wellness department makes available personal trainers and coaches to employees who have a BMI greater than 25 plus some risk factors. Coaches are more well rounded and advise on lifestyle changes, while trainers advise on fitness and exercise programs.
Daniel Katz has been providing useful information on the medical side of obesity treatment.
3. The next discussion topic was Long-Term Care insurance. Richard Saunders informed the committee of a looming rate increase. For the last seven years our provider has been John Hancock. This insurance company guarantees coverage to new employees if they enroll within 60 days of joining, but after that coverage involves a questionnaire and approval. They have not had a rate increase in seven years. To this Anand Vijh asked why a rate increase was necessary. They do not provide comprehensive care, rather a fixed dollar amount if someone requires care, so their cost may not have gone up. Richard Saunders clarified that earlier they had probably under-estimated probabilities of covered participants requiring long-term care. Besides, with people living longer also their costs had gone up. So they are asking for a 45% rate increase across the board. Their application is pending with the Iowa Insurance Commissioner. The Commissioner will probably ask for an outside opinion from an actuary and will approve some increase, usually the lower of what is asked by John Hancock and what is the actuary’s opinion. Richard Saunders also informed the committee that other Big Ten universities had seen their costs go up by around 40%. Thus, it appears some rate increase is likely and it will affect all insured. Enrollment may drop as a result of this increase.
4. The discussion next shifted to Health Insurance Plan for 2012. Richard Saunders informed the committee that Chip II will probably survive another year or more. It has around 300 participants at present. If the numbers of participants go down to around 100 the insurance plan becomes unsustainable.
At present there are only a few major issues under consideration concerning the Health Insurance Plan for 2012. One issue is the possible inclusion of alternative medicines. On this topic the committee awaits a presentation by Dr. Nicole Nisly from the Department of Internal Medicine.
There was a brief discussion of copayments for hospital visit under the UIChoice plan. The current copayment of $5 is clearly very low. Some members proposed that it could be eliminated as the collection cost is so high. Other members wondered why it was so low to begin with. Low copayment results in participants seeking excessive health care for small problems. It was felt that this was really a UI HC issue and if they felt this value was wrong than they could bring their concerns back to this committee. Therefore, no action was taken on this matter.
The discussion shifted to generic versus name brand medications. Name brand medications are much, much, more expensive. The FDA prescribes that generic medicines should be the same as name brand, but it does not seem to be so in all cases. Dan Katz clarified that in many cases doctors specifically prescribe name brand medicines since they believe that the generics are less effective. Bernard Sorofman from the Pharmacy Department provided the expert opinion that this is often so, hence the doctor’s insistence on name brand medications is not irrational.
Given the major cost issue of name brand drugs, questions were asked whether we can outsource medications (e.g. Canadian pharmacies). However, this is not possible under the law. In fact, the IRS would not allow the cost of foreign medications to be covered even under Health Care Spending Account Program which is primarily a set aside with the employee’s own money. So the university is essentially stuck with the higher drug costs when a provider prescribes a drug under the Dispense As Written (DAW) rules.
At this point the discussion shifted to what over-the-counter (OTC) drugs could be included in the health plan. Currently OTC’s are not covered. Several medical professionals in the room expressed the opinion that many OTC’s are necessary and are frequently prescribed by the physicians. In any case, under the present Health Care Spending Account system which is regulated by the IRS, a participant still needs a prescription to cover them. It will be challenging to come up with a list of covered over-the-counter drugs. Still, the medical professionals in the room thought that it was possible to come up with a list of ten or so widely prescribed and used over-the-counter products. This would have to be a manual process handled by the Benefits Office since the insurance companies would not be able to cover them. This idea was dropped, but Saunders was directed to look at what specialty items are covered through prescriptions only, such as prenatal vitamins or B-12 shots.
In response to other member questions, Richard Saunders informed the committee that hearing aids are covered under the present plan. In addition, 90% of the cost of breast pumps up to a maximum of $250 is covered. One excluded item is wigs for cancer patients. This could be covered up to a maximum dollar amount if the committee decides. A similar issue concerns the coverage of cosmetic aids to cover mastectomy damage to cancer patients.
Richard Saunders reminded the committee that discussion of changes to health plan for 2012 must be completed by the May 2011 meeting.
5. Richard Saunders explained to the committee that recently there has been a spurt in unsolicited emails from investment advisors to many employees. These advisors can access publicly available information on salaries and emails and there is nothing in the law to prevent them from offering their services. The advisors typically charge heavy fees, of the order of 1% of managed assets. Thus, if a targeted employee has assets of $1 million, an advisor would charge a fee of $10,000 a year for a wrap account to manage the funds. Their interest becomes obvious. The TIAA-CREF has a local office which provides some services for free, but does not actively trade the investment options like these vendors would. However, this is an area where the employees clearly have to watch their own interests.
6. The meeting adjourned around 1 p.m.
Anand M. Vijh