February 6, 2012
Benefits changes presented to senior leadership
The university’s Benefits Advisory Committee has developed a set of recommendations, which includes changes to health care benefits and costs for Johns Hopkins employees, with the anticipation that they would take effect Jan. 1, 2013.
The proposed changes, and the rationale behind them, will be discussed at a series of 31 town hall meetings to take place at the various university campuses starting this week and going to March 2. The meeting presenters will solicit feedback from the university community.
The first town hall will be held from 10 to 11 a.m. on Wednesday, Feb. 8, in Shriver Auditorium on the Homewood campus.
The committee, which was formed last year, recently completed a comprehensive review of the university’s benefits programs at the request of Provost Lloyd Minor and Daniel Ennis, senior vice president for finance and administration. The goal of the review was to evaluate ways of reducing benefits program expenses by $10 million to $15 million.
Johns Hopkins’ senior administration said that reductions are necessary in light of increased pressure on the university’s financial position, and the rising costs of health care.
Retirement benefits and the tuition grant program, elements valued strongly by employees, are not proposed to be changed. The committee also sought to protect lower-paid employees from significant health care increases.
The list of recommendations includes increasing over time the total percentage paid by employees for health care, and increasing deductibles and out-of-pocket limits to be more consistent with the market. Other proposed changes include the reduction of vacation carryover days for new hires and the implementation of salary-based university contributions to health care costs; those who earn less will pay less.
These changes are recommendations only and will not be final until they are approved by President Ronald J. Daniels, Minor and Ennis.
With the proposed changes, the committee would be able to achieve a 5 percent cost reduction for the university.
Ennis said that reducing benefits expenses is essential for helping the university better prepare for the future and deal with revenue challenges such as reductions in federal government grants, lower investment returns and tuition pressures.
“The committee members had no small task,” Ennis said. “They were asked to conduct a systematic review so that we are well-positioned both financially and competitively in future years, while still meeting the needs of the community. These recommendations are the result of a thorough and thoughtful process that, we feel, will allow us to retain our competitiveness and preserve the broad range of benefits that we offer our employees.”
When considering its options, the committee sought input from staff and faculty in the form of a survey. Johns Hopkins hired Mercer, a human resources consulting firm, to gather data from the survey and conduct the focus groups.
Employees were asked to rank their benefits preferences and rate how much they valued each. The university’s benefits package includes health care coverage, a tuition remission program, retirement plans, life insurance, flexible spending accounts, vacation days and sick leave, a commuting-to-work program, adoption assistance and many other offerings.
Nearly 88 percent of participants rated the overall program favorably. The most valued benefits were the university’s contributions to retirement plans, health insurance choice, paid time off for staff, retiree medical coverage and tuition grant program.
The committee took this input into consideration and focused its efforts on health care costs, as they have been rising faster than inflation and salaries.
Charlene Hayes, vice president for human resources, said that the undertaking was prompted by the rising costs of health care and increased pension regulation.
In fiscal year 2010, the university’s actual benefits program costs were more than $342 million, a 25 percent increase from 2006 totals. The projected costs in fiscal year 2015 represent a 70 percent increase from 2006 figures.
The upcoming town hall presentations will include an overview of JHU’s financial profile, the need for cost savings, recommended changes for 2013 and what they mean for employees, and what steps will take place next.
The 14-member Benefits Advisory Committee, which includes at least one representative from each academic division, examined current benefits, looked at peer institutions as benchmarks and considered alternatives to existing practices to bring about more-efficient delivery systems and design a more cost-effective program.
The group is co-chaired by Donald Steinwachs, a professor of health policy and management and director of the Health Services Research and Development Center at the Bloomberg School of Public Health, and Douglas Hough, an associate professor and chair of the Business of Health program at the Carey Business School.
The committee’s reach did not extend to the benefits offered to Applied Physics Laboratory and Johns Hopkins Health System employees.
For the full schedule of the town hall meetings and more information, go to benefits.jhu.edu.