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Health Premiums Up 60 Percent

By Nathan Collins


After a surprise announcement that MIT Medical would likely have a massive deficit next year unless premiums were drastically increased, MIT raised the price of MIT’s Extended Hospital Insurance by 60 percent, three and a half times last year’s increase.

Kirk D. Kolenbrander, the special assistant to the president and chancellor, said in a Friday e-mail that the individual Extended Hospital Insurance premium will increase to $1,440 a year from $900 a year. The increase is $45 per month. Rates for dependents and other affiliates will also increase by 60 percent, he said.

The $840 health fee, which is built into tuition and covers basic care at MIT, will not increase.

The premium increase will be partly offset by an increase in graduate student stipends. MIT announced Friday a $30 increase in the graduate student stipend over the $1,950 per month stipend set in February, adding up to a net $15 per month increase in the cost to a graduate student.

Kolenbrander said that the cost to undergraduates on financial aid will be “largely offset,” and for undergraduates not on financial aid or graduates who pay their own way, the increase will be the equivalent of a “tuition increase.” He said that about half of MIT undergraduates use the extended insurance plan.

In addition, “we’ve committed to turning this into a monthly payment” without interest, Kolenbrander said. At the second of two Graduate Student Council-sponsored town meetings in late May, MIT officials suggested using a bursar’s office payment plan --with interest -- to mitigate the impact of the premium increase, but the idea did not appear to go over well with students in attendance.

With monthly payments, MIT has “lessened the bump in September,” Kolenbrander said.

The cost of providing care is only partly reflected in the premium increase. Students originally faced a 100 percent premium increase that was later reduced to 70 percent. Kolenbrander said that MIT will “eat” the ten percent difference to bring the increase to 60 percent. “We cannot expose our students to such a significant increase” as originally proposed, he said.

Graduate students “can live with” the effective $15 increase, said GSC President R. Erich Caulfield, and “monthly billing is a win for everybody.”

Caulfield said that he and administrators continue to be concerned about rates for families, since these are not offset by stipend increases. “I think that’s everybody’s biggest concern,” he said.

Increase larger than expected

“We knew there was going to be a whopping increase” and thought it would be closer to 22 percent, said Dean for Graduate Students Isaac M. Colbert, but administrators did not learn from MIT Medical of the insurance problems until after graduate student stipends were set.

Usually, administrators setting next year’s stipends receive information about insurance premiums in January or February and include that information in determining the stipend, Colbert said. He said last year’s increase was about 17 percent, and that “no one expected such a huge increase.”

Caulfield said that the GSC found out about the increase the Monday before the first town meeting on May 14. GSC Vice President Michael R. Folkert said that the announcement was a surprise. He said that “everyone was working” with the 22 percent figure.

“We’re sensitive” to the decision timing and that the decision came late -- “out of phase” -- Kolenbrander said. “The administration takes responsibility for the fact that the timing was skewed.”

MIT Medical had large deficit

MIT Medical Director William M. Kettyle said that several factors went in to the increase. About five years ago, MIT Medical had accumulated a several-million-dollar surplus and decided to expand prescription drug and mental health care coverage. Increase in demand for those services led, in part, to a “more rapid depletion of the reserve than we had anticipated,” he said.

Kolenbrander and Ellen Offner, MIT Medical director of finance, health plans, marketing, and planning said that the increase was due to across-the-board increases in demand for services and the cost of medical care. Kolenbrander said that Boston medical costs had increased by about 25 percent per year and that MIT premiums had increased at roughly half that rate.

“Everything was working toward a large increase,” Offner said.

Rates now similar to other schools

Kolenbrander said a large increase in premiums is needed to get MIT’s insurance revenue in line with its expenditures.

The rate increase brings students’ health care costs roughly in line with other schools. Factoring in the $840 health fee, next year’s rates are about the same as those at Harvard University.

Several administrators said that MIT was not attempting to recoup past losses, and that the premium increase was only meant to cover the cost of health care for the coming years. Kolenbrander described the current insurance plan as “underpriced.”

MIT did not impose steeper rate increases in the past because “we did not want to increase the premium significantly” and put a strain on MIT students paying for insurance, Kettyle said. He said that “unfortunately” they did not anticipate such a rapid depletion of the surplus that subsidized new benefits.

Access to outside providers limited

The rate increase comes with some changes in health care benefits. Instead of the current indemnity plan, MIT will use a preferred provider organization, which limits somewhat the number of doctors a student can visit for care. The number of available doctors will still be “very high,” about 75 to 80 percent of providers currently available to MIT students, Offner said.

There will be a minimal “coinsurance” payment -- a percentage of the cost of a service to be paid by students -- for outpatient services not provided at MIT, and there will be a $1,000 limit on the amount students must pay out of pocket per year, Offner said.

Mental health services will also shift further inside MIT Medical. At the town meeting, Offner announced a limit of 24 visits to a non-MIT therapist, 12 of which come with a coinsurance payment. Students will have to pay for any additional visits.

To counteract that benefit reduction, Offner said that MIT has hired three full-time therapists and is “actively pursuing” several more part-time therapists and mental health outreach staff.

Kettyle said that the outside mental health benefit was sufficient for most students, and that it would be too expensive to provide more care. “We have to average out” in order to offer affordable insurance, he said, and emphasized the increase in MIT’s mental health care capacity.

Kolenbrander said that a key recommendation of MIT’s Mental Health Task Force was to bring mental health care inside, since dedicated MIT providers would better understand MIT problems. “We’ll start to see our ability greatly enhanced to treat students” on campus. Offner described the current mental health care benefit as an “interim measure,” meant to deal with students’ mental health care needs while MIT sought new staff.

“We’re grateful for the leadership of the GSC,” Kolenbrander said. Offner said that “we made a substantial commitment” to working with graduate students “every step of the way.”

Caulfield said that “the process over the last few weeks has been a good model,” with the GSC and administrators working closely on the insurance problem. He said he hopes for more such work on other issues of concern to graduate students. “Students would be happier,” and administrators benefit as well, he said. Related stories: