The increasing costs of health insurance are one of the facts of life faced by MIT employees this month as they pick a health plan for the coming year.
Cost is by no means the only factor-the MIT Benefits Office's six-page health insurance chart compares the seven plans on 45 separate features. Some of these do involve cost, such as deductibles, out-of-pocket co-payments on medical bills, the cost of visits to the doctor and prescription drugs.
The principal cost that hits individual paychecks each pay period is the premium, which will increase more than 30% on average (from 5% to 86% depending on the plan chosen). As high as the new employee premiums are, however, they don't reflect the full cost of the insurance, which MIT subsidizes significantly.
For families, the amount of subsidy that MIT provides on each health policy for 1993 will be $4,250 for support staff and service staff, and $3,951 for faculty and academic/administrative/research staff.
The families will pay the additional amount, which for support and service staff ranges from $4,390 (up 44%) for Blue Cross/Blue Shield Option 2 (BC/BS 2) to $1,109 (up 6%) for Harvard Community Health Plan (HCHP). The additional amount paid by faculty and staff ranges from $4,689 (up 40%) for BC/BS 2 to $1407 (up 6%) for HCHP.
The total annual cost of family health insurance ranges from $8,640 for BC/BS 2 to $5,358 for HCHP. The other plan costs are $7,618 for BC/BS 2 for out-of-state residents; $7,200 for the Flexible MIT Health Plan; $6,080 for Bay State Health Care; $5,888 for Tufts Associates Health Plan; $5,544 for Central Massachusetts Health Care; and $5,484 for MIT Traditional Health Plan.
The average annual cost to MIT and each employee for family health plans is $6,476.
For individuals, the amount of subsidy that MIT provides on each health plan for 1993 will be $1,714 for support and service staff, and $1599 for faculty/staff.
The individuals will pay the additional, which for support and service staff ranges from $1,886 (up 9%)for BC/BS 2 to $257 (up 10%) for HCHP. The additional amount for faculty/staff ranges from $2,001 (up 8%) for BC/BS 2 to $373 (up 6%) for HCHP.
The total annual cost of individual health insurance ranges from $3,600 for Blue Cross 2 to $1,972 for Harvard. The average is $2,522. The other plan costs are $3,047 for BC/BS 2 for out-of-state residents; $2,820 for the Flexible MIT Health Plan; $2,311 for Central Massachusetts Health Care; $2,240 for Bay State Health Care; $2,180 for Tufts Associates Health Plan; and $2,004 for MIT Traditional Health Plan.
A major new element of cost to take into consideration if you choose the Flexible MIT Health Plan is the out of pocket expense limit on medical services that members are arranging on their own. (This doesn't apply to services that patients receive at the MIT Medical Department or when their MIT doctor refers them to outside specialists or hospitals. For self-selected services, the limit on out-of-pocket expenses is doubling in 1993, from $1,500 to $3,000 for an individual, and from $3,000 to $6,000 for a family.
The out of pocket expenses include the 20% co-payments on medical services and the $500 per person deductible for services arranged by members on their own.
Linda L. Rounds, executive director of the Medical Department, said "This benefit change has become necessary because Flexible MIT Health Plan claims and out-of-network utilization have increased more rapidly than the premium levels set to cover these expenses at the annual renewal last January. As the rates for the indemnity insurance plan offered at MIT have skyrocketed, individuals who have bought health insurance based on price alone have joined the Flexible Plan perhaps without understanding that the financial stability of the Flexible Plan is dependent on members' use of services provided by the MIT Health Plan or its network of providers.
"The increase in the annual out-of-pocket expense limits is a necessary and appropriate step intended to encourage use of health care services at the MIT Medical Department and by referral from the member's MIT physician," Ms. Rounds said.
This information was inadvertently omitted from Page 1 of the "1993 Health Insurance Comparison Chart" distributed in the 1993 Benefit Choices packet. A new page 1 has been distributed to everyone to correct the omission.
For Blue Cross 2, the annual deductible amount is $350 per person. After the deductible, the out of pocket expense limit is $1,000 for an individual, and $2,000 for a family.
How subsidy works
MIT increases its subsidy each year by half the weighted average increase in the total costs of the individual and family plans chosen by its 8,600 employees. Health insurance plans that go up dramatically more than the weighted average increase begin to drive their price beyond what many consumers are willing to pay.
MIT received the rates from each health plan in September, and developed the employee premium rates based on current health plan choices. Once the weighted average increase is determined, MIT pays 50% of it and adds it to the previous year's subsidy base to determine the new subsidy.
The new subsidy figure for faculty/staff families in 1993 is $329 a month.($3,951 a year). The subsidy for support and service staff families is $4,250. For individuals, the subsidy is $1,599 for faculty/staff individuals and $1,714 for support and service staff individuals.
A version of this article appeared in the November 18, 1992 issue of MIT Tech Talk (Volume 37, Number 14).