The national health care overhaul, which extends insurance coverage for young adults, is expected to increase the University’s costs.
As part of the Patient Protection and Affordable Care Act, all employers are required to offer insurance to adults under age 26, regardless of their student, financial or marital status. In the past, dependents in some states were dropped as young as age 19 or upon finishing college. The new law will take effect Sept. 23, or whenever employers renew their health care plans.
For Duke employees, the new health care policy—which will be implemented Jan. 1—will likely translate into higher premiums. The new policy will cost the University an estimated $1 million dollars, but increases to health care costs will probably fall well below the national average, said Vice President for Human Resources Kyle Cavanaugh.
“We are moderately optimistic of the financial status of the health care plans for 2011,” Cavanaugh said. “You’re seeing national increase in premiums in the 10 to 15 percent range, and we think we are going to be able to keep our increase in premiums well below that.”
Cavanaugh said Duke has been able to keep costs down through a variety of changes, especially in its pharmacy arrangements. In a May interview, Cavanaugh highlighted the increase in generic medications and mail-order prescriptions as ways the University reduced costs.
Although Duke’s new care does not take effect until 2011, employees and their dependents will be able to enroll in the policy beginning Oct. 1. The enrollment period will allow University administrators to find out by November how many new dependents will be insured under Duke health care.
The University currently covers about 85 percent of all employee health care costs and 50 percent of dependent costs, Executive Vice President Tallman Trask said. It remains unclear, however, how many dependents will be added to the University’s policy.
“We don’t know how many people we are going to get yet,” Trask said. “We’re trying to figure out how many [new dependents] there are out there and might come back on our plans. It’s a wide range, from just under 1,000 to over 3,000.”
Young adults have the highest rate of uninsured of any age group, according to the U.S. Department of Health and Human Services website. Despite the perception that the youth do not need health insurance, nearly half of uninsured young adults have trouble paying medical bills, the site noted.
“Before this law actually passed we spent quite a bit of time taking a look at a lot of the items being discussed and running various scenarios of what the cost would be,” Cavanaugh said. “It’s expected around 1,000 [dependents] will enroll, which would potentially cost the health plan about an additional million dollars.”
Many Duke graduate students will be able to take advantage of the new policy. In the Spring, Fallon Ukpe, currently treasurer of the Graduate and Professional Student Council, provided an update about the effects of the bill to the general assembly.
“Legally, it’s not totally enforceable yet, so there are a lot of insurance companies that haven’t enacted regulations based on the law that has been passed,” said Ukpe, a student in the School of Medicine and the Fuqua School of Business. “There’s still a lot to see as to how it’s going to affect everyone and we’ll wait and see what the total effect will be.”
Although Cavanaugh said few employees have inquired about the legislation recently, there was a “flurry” of communication and phone calls from employees immediately following the passage of health care reform. The University sent out various e-mails explaining changes to Duke policy and many employees responded to clarify the matter, he added.
“It’s a very positive development for individuals that couldn’t get coverage,” Cavanaugh said. “And it’s a very positive development for families paying individual premiums.”
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