Although some members of the Dartmouth community have criticized the College's proposed reductions in healthcare benefits for retiring faculty and staff, Dartmouth's changes are part of a larger trend among higher education institutions that began as early as the mid 1990s.
Several colleges and universities reduced benefits for retiring staff following growth in the cost of healthcare and changes by the Financial Accounting Standings Board in its 1991 Statement of Financial Accounting Standards No. 106.
FAS 106 mandated that employers report the liability of future costs for all existing and future retirees in their financial statements -- a shift from the previous standard, which required that institutions only disclose currently incurred costs. This change significantly increased the expenses reported by colleges and universities.
The plan currently proposed at Dartmouth would eliminate the College's contribution for new faculty and staff. Under this proposal, the College would not contribute any money towards the premiums of retiring employees hired after Jan. 1, 2009.
The proposal also reduces the College's contributions to healthcare costs not covered by Medicare for current faculty and staff from 100 percent to between 40 and 85 percent. The percentage would be determined by a formula that would incorporate the employee's age and years of employment by the College.
The plan is born out of a health insurance working group convened by the College Benefits Council following a 2003 mandate by the College's Board of Trustees.
Dartmouth's proposed changes reflect a pattern of healthcare benefit changes in other universities, but, if imposed, the plan would place the College behind some of its Ivy League peers, which offer contributions to retirement healthcare costs to all employees.
At Cornell University, 90 percent of individual premiums and 75 percent of the family premium for both active and retired staff members are covered by the university on the endowed, non-state side of the institution.
"We are currently ahead of our peers," said Blaine Friedlander, assistant director of public relations at Cornell, who noted that the university frequently reviews its benefits plan.
Harvard University, which recalculates the University's retiree healthcare subsidy each year, covers up to 80 percent of these premiums, Mary Ann O'Brien, director of communications at Harvard, told The Dartmouth. The amount of coverage is determined by the retiree's years of service, date of retirement and choice of medical plan.
According to Yale University's website, retirees from the university with over 30 years of service receive comparable levels of support for health insurance as were received by both the retirees and their spouses prior to retirement. Other retirees, and their spouses, receive a contribution to their premiums equal to three and a third percent of the contribution the university would have paid towards that employee's coverage under the Yale Health Plan for each year of service to the university.
Both Brown University and the University of Pennsylvania have reduced their plans in recent years.
"Essentially what Brown did is get out of the post-65 retirement health benefits," Drew Murphy, the head of benefits at Brown, said.
Brown, which eliminated its contribution towards healthcare for retired people over 65 in 1994, now subsidizes active health coverage for employees who are at least 55-years-old and have at least 10 years of service at the university, Murphy said. Once these employees reach 65 years of age, they are switched to a Medicare plan not subsidized by the university.
UPenn, which previously contributed between 50 and 70 percent to healthcare and prescription drug costs for retirees and their dependents, cut this subsidy to a maximum of 60 percent for retirees and 30 percent for dependents, among other amendments to its plan, according to a 2006 TIAA-CREF policy brief given to The Dartmouth by a representative from the University of Pennsylvania. The representative declined further comment.
A representative of Princeton University would not speak on the record regarding Princeton's plan.
Other institutions have turned to Emeriti Retirement Solutions to deal with the rising healthcare costs, which have been exacerbated by the impending retirement of the "baby boomer" generation, a September 2006 article in The Chronicle of Higher Education reported.
Emereti is a non-profit defined-contribution plan where members put money in individual accounts for their employees. Membership colleges and universities must place an amount equivalent to at least 0.5 percent of an employee's annual pay into tax-free trusts called Voluntary Employees' Benefits Associations. Employees may then put additional money into a separate account and are responsible for directing the investment of both accounts, the Chronicle reported.
Gettysburg College is among the institutions that have chosen this option, joining Emeriti in July 2005. 40 institutions of higher education had joined Emeriti as of Sept. 2006.
"We bit the bullet way back then," Regina Campo, co-director of human resources and risk management at Gettysburg, told The Dartmouth. "Dartmouth is just doing it now."
Gettysburg's membership in Emereti followed other changes the college made in the immediate wake of FAS 106, including the institution of a flat dollar contribution toward these costs for staff members hired after 1992, Campo said.
