Henderson State University will terminate its health insurance contract in favor of moving to a fully insured plan that will increase employee premiums by less than the university was facing.
University trustees approved the move during a conference call Wednesday afternoon.
It's unclear how much Henderson State would avoid paying by entering into the new contract, which has not been fully negotiated or signed, with Blue Cross Health Advantage. While the university has an idea of premium increases, it has not officially decided how much of the increase would be shouldered by the university and how much would be shouldered by employees. Cost estimates were not included in the agenda packet presented to trustees.
"It's very likely that the percentage paid by employees will be similar to what it's been in the past," acting President Elaine Kneebone told trustees.
The administration doesn't want to make changes there, Kneebone said, in light of recent salary cuts for three-quarters of the university's employees.
Switching from a self-insured plan to a fully insured plan will avoid more stressful conversations about who covered how much of the premium increase, said Chuck Welch, president of the Arkansas State University System. The ASU system, in accordance with a memorandum of understanding with Henderson State to help straighten out the university's finances, recommended switching plans.
"If we had stayed in the self-insurance plan, premiums would have gone up considerably," Welch said.
He added that there will be "little difference" in the coverage.
Wednesday was the latest trustees vote in a series of votes to cut the budget or overhaul policy to benefit the budget. The university is looking to cut several million dollars within its more than $65.2 million to $65.5 million budget. Before an estimated $3.3 million to $3.5 million in cuts were approved at the end of September, trustees stared down a $4.9 million budget shortfall from last year, a $6 million interest-free loan from the state due to be paid back beginning in the spring, and a $68.7 million budget.
Beginning in January 2018, the university became self-insured, a move that did not require trustee approval. The move was strongly criticized by trustees Wednesday.
"It was appalling to me that we were in a place of self-insured plans when we didn't have the reserves" to cover any catastrophic costs, Trustee Creed Spann said to a loud "amen" from another trustee.
Under fully insured plans, insurance companies assume the risk of the plan. Under self-insured plans, the employer assumes the risk.
The board should approve health insurance changes every year, Trustee Brown Hardman said. He reflected on the change to self-insurance two years ago.
"Well, I thought it was the dumbest thing we'd ever done," he told trustees.
The previous university administration did not carefully monitor funds, board chairman Johnny Hudson said.
"This is the right move today, what we're doing," he said.
Hardman made the motion to approve the change and requested that the administration come back to trustees before officially opening enrollment under a new contract.
The motion was approved on a voice vote with no opposition. Five of the university's seven trustees attended the teleconference meeting. Trustees Bruce Moore and Ross Whipple were absent.
Health insurance premiums will be determined next week, and the administration will present them to trustees at their Oct. 24 meeting, university spokeswoman Tina Hall said.
Employees will likely see "very little difference" in their premium rates under the fully insured plan, said Julie Bates, executive vice president and chief financial officer of the ASU System. However, employees insuring their families will see premiums increase because of the higher costs of family health care, Bates said.
Henderson State's budgetary challenges are in part related to several years of declining enrollment, but other financial-management issues last year -- when the university enrolled more students than the previous year -- exacerbated existing budgetary challenges.
More than $1 million of budget cuts approved last month will come from 3% salary cuts for most employees beginning Jan. 1. That will affect 309 of the school's 399 employees, including nonclassified employees, faculty members and administrative staff members, Hall said.
Trustees also approved lowering the university's employee retirement match, eliminating course offerings, reducing the president's office expenses and cutting about $900,000 in supplies and travel. How many courses are eliminated will determine how much the university saves from that round of cuts.
Metro on 10/10/2019