Rising costs in health care could mean an 8 percent increase in insurance premiums for University of New Mexico employees next year.
The increase is needed to close a projected $6.2 million gap next fiscal year, which starts July 1, said Helen Gonzales, vice president for human resources.
“It’s a shared challenge,” Gonzales said at an employee forum Wednesday. Since UNM is self-insured, “we’re the plan administrators, but we’re trying to administer the plan in the interest of … our employees.”
“We recognize that this is an emotional issue,” she said.
UNM is also considering other ways to fill the gap, including tapping into reserves and requesting $1.5 million in funding from the university’s operating budget. UNM covers 12,500 employees and their families.
The university did not raise premiums last year, but it imposed a 2 percent increase the year before that, Gonzales said.
A single employee who earns more than $35,000 a year now pays a monthly contribution of $152 for Lovelace coverage and $189 for Presbyterian. Families pay $441 a month under the Lovelace plan and $548 for Presbyterian coverage.
Meanwhile, health care costs have soared on average about 7 percent annually in the past several years.
There’s a variety of factors at play, including the fact that the average age of university employees, 50 years old, is higher than at most businesses, Gonzales said.
Changes brought on by health care reform also have had an effect. For example, the university must now cover free wellness checks for employees, and it had to increase the dependent age to 26.
Gonzales said shifts in demographics also have contributed. People live longer, and therefore need health insurance longer. And the increase in obesity-related chronic illnesses means higher costs, she said.
UNM projects it will pay $61.7 million in health care costs next year, compared to this year’s budget of $55.5 million.
Gonzales cautioned that the projected $6.2 million gap is just that – projected.
“Right now we don’t know that we’ll realize all of these trend costs,” she said. “We could have a really good health year.”
UNM has taken some measures to reduce health care costs, Gonzales said.
In 2010, it transitioned to a self-insured system that officials said saved about $4.9 million in one year. In 2011, the school performed an audit on insurance dependants, kicking out people who weren’t eligible but who had slipped through the system. It also has received about $400,000 in federal grants.
But UNM had to use reserve funds in the past two years to the tune of $4.9 million, Gonzales said. It could dip into those reserves this coming year as well, she said.
— This article appeared on page A1 of the Albuquerque Journal