A university: acting locally.

Health-Care Cost Per Employee: $2,400

Despite all the rhetoric about the need for sweeping health-care reform, it's not likely to happen anytime soon. Instead, we'll see targeted reforms that address employees' major concerns. Some of these are guaranteed-issue coverage to employer groups and employees; the ability to transfer coverage to new employers; coverage for part-time workers; and gap coverage for early retirees not yet eligible for Medicare. Pre-existing conditions and waiting periods will probably go by the wayside, and coverage restrictions in general will ease. Managed-care organizations will develop more effective, equitable policies on experimental procedures or treatment, pain management, referrals to specialists and so on.

Oklahoma -- along with many other states -is going ahead with its own health-care reforms. A few years ago, the state passed legislation to give tax-credit incentives to small businesses that didn't currently offer health insurance to their employees. Our legislature is now considering bills to encourage purchasing alliances. And it's been focusing on workers' compensation reform lately, too.

Meanwhile, employers and providers have been coming up with some solutions of their own. The University of Tulsa is a member of the Tulsa Business Health Group, an employer coalition that's helped effect many changes in health-care delivery and costs in the Tulsa area. A private grant the group received a few years ago enabled small employers to get affordable health insurance through the Metropolitan Tulsa Chamber of Commerce.

Recently, the group and the chamber of commerce established a task force -- the Northeast Oklahoma Healthcare Coalition -- to explore the possibility of establishing a health-care purchasing cooperative. Over 100 large, medium-sized and small employers representing 60,000 lives are financially involved in this effort. This represents 15 percent of the available employee and family lives in the Tulsa area.

As an employer, the university has 1,100 full-time employees and 250 regular part-time employees. We also have an additional 800 student employees on the part-time payroll. About 1,000 full-time employees participate in the medical plans. To keep things running smoothly, two full-time employees work in health-care administration, and senior management devotes a substantial amount of time to it.

From the dollar side, our total revenues and expenditures are $100 million, and our health-insurance direct costs were $2.6 million for the last fiscal year. This was 6.25 percent of payroll, a number that may increase to 7 percent this year, mostly because of inflation.

The biggest health-care costs we face are associated with our aging employee population. We have a much more mature employee group than the average employer (despite all our student employees), something we've confirmed actuarially. However, our large part-time work force also could be a liability for us if the Clinton plan passes in Congress. Currently, our part-timers don't receive benefits. The Clinton plan would probably require us to provide some benefits for them, and that would be a heavy financial burden for us.

Through the years, we've had a progression of plans -- the standard Blue Cross and Blue Shield plans of the 1940s and 1950s; then another insurance plan; a self-funded plan with an insurance company; and three health maintenance organizations with a third-party administrator. Under our current plan, which took effect in January, we use an HMO, plus an in-network and point-of-service self-funded plan, all administered by the HMO. We're saving by using the HMO's discounted network-provider contracts and fee schedules with physicians, clinics and hospitals.

In conjunction with the recent changes in our plan, we also transferred our prescription coverage from a national prescription service to the HMO so that we could take advantage of the discounts it offered us. And we placed all psychiatric and substance-abuse coverage with the HMO case managers.

The HMO family premium costs 70 percent of the actuarial cost of the self-funded plan. The self-funded plan has cost-containment features, which in recent years have produced moderate savings for us. About two-thirds of our participating university employees have chosen the HMO option because of the premium cost incentive and benefits. The employee pays about 15 percent of the premiums for single coverage and 30 percent of the premiums for family coverage in both plans. In addition, we offer a Section 125 flexible spending account.

Finally, we extend retiree medical coverage to employees 60 years old and up who have 15 years of service. But we've capped retiree coverage (Medicare supplement) at age 70 for many years, and we're unlikely to change that.

From our side of the fence, the Clinton plan looks fairly cumbersome, and it won't get through Congress, at least not in its original form. The cost of achieving universal coverage casts a long shadow, and the fact that Medicare isn't included is a big problem. Any substantial health-care reform should incorporate not only Medicare but Medicaid and workers' compensation, because otherwise we'll never eliminate the cost shifting that's a major component of the health-care crisis. When hospitals have to take in charity cases and walk-in patients with no insurance, they pass their costs on to the insurance companies, which in turn pass the costs to employers. And that's just one example of how health-care costs get transferred from one payor to another. Unless we break that cycle, we'll get nowhere with reform.

by John A. Osborne Associate Vice President and Controller University of Tulsa, Tulsa, Okla.