November 6, 2009
Arkansas State University
In last month's issue of First Friday on Oct. 2, I reported to you on several interesting activities in which I was involved on behalf of the university during September. Unfortunately for me, October was not interesting; just painful. I was confined to my home for most of the month, following back surgery on Oct. 8. Nevertheless, I have participated in campus affairs fairly significantly, given the marvels of modern technology, and the dedication of Irene, my office staff and administrative colleagues who have "kept me in the loop." By having others stand in for me at meetings and public events, I also have had time to do more reading than usual, and to spend some quality time with Irene, our dog Bess, and our cat, Sebastian!
In this issue, I shall discuss how the university plans to cope with the revised revenue forecast from the State of Arkansas, and review a new early alert and advisement system that seeks to benefit our students who are in academic or personal distress and need campus support services. Additionally, I want to share some thoughts, as a recent participant in the health care system in Arkansas, about the current national debate on health care reform and how it could impact our campus health insurance program. Finally, I want to close by remembering our recently deceased friend, Mike Medlock, and mention three items from last month's edition of First Friday that I said I would discuss in this edition.
Addressing State Revenue Reductions
Because state revenues have fallen short of projections for two consecutive months, the Arkansas Department of Finance and Administration on Oct. 20, 2009, revised its 2009-10 fiscal year revenue forecast downward, from "Category A plus 18 percent of Category B" of the Revenue Stabilization Act to "98 percent of A and no Category B." For our campus, this means a decline in state revenue of $1.2 million in the Educational and General budget.
In response to this reduced revenue, the university plans to restrict the use of all temporary salary savings, the uncommitted portion of the reserve for classified pay plan implementation, the Building, Grounds and Facilities account, and the Task Force implementation funds. We anticipate the total dollars accumulated through this process will be sufficient to offset the current round of state cuts without impacting existing departmental budgets this year. However, with the announcement of a reduction this early in the fiscal year, all departments should manage their resources conservatively as we continue to monitor state revenue collections over the remainder of the year.
While the university, by prudent management throughout our divisions and departments, has already accumulated more than $600,000 in temporary salary savings in the Educational and General budget, we will need to bring that number up to $720,500 in order to meet our goal of covering this shortfall. To monitor our progress toward this goal, ASU-Jonesboro is implementing a hiring review process for all new and replacement personnel. As of Oct. 26, all new requests to fill vacancies are being reviewed by the Executive Council and decisions are being made as to which vacancies will be filled. Procedures to be followed regarding position reviews will be distributed by the Division of Finance and Administration. Positions which are fully grant funded will not be affected by this process. Positions within the Auxiliaries budget will be reviewed also, even though the state revenue reduction affects only the Educational and General budget.
While we have the ability now to cover this shortfall, the action we are taking is a temporary solution. If state revenues do not recover, or even deteriorate further, all divisions will be required to make permanent reductions in the future. Auxiliary budgets will equitably share in these reductions.
New Emphasis on Retention and Advising
On Nov. 2, University College formally announced its new campus-wide "Student Early Alert System," which has been developed so that faculty and staff can refer students who may be experiencing academic or personal distress to appropriate campus support services. This system is another way that University College is working to help our students and at the same time help improve the university's retention rate. Often, early intervention is the key to helping a student get back on track before it is too late.
The Early Alert System is one of a variety of tools that have been implemented to assist students. Of course, one of the most traditional and proven methods is good advisement. Almost every student can benefit from having good academic guidance. ASUJ faculty members are often cited by individual students for their dedication as academic advisors. Good advising is formally recognized each year during Convocation of Scholars with an award to one person, but I believe the entire university must work to ensure that good advising is an integral part of ASUJ's institutional culture. This year the Academic Advising Council on Excellence, a campus group with a faculty member from each academic department, will meet on Nov. 16 to begin the process of evaluating academic advising according to the standards of the Council for the Advancement of Standards in Higher Education. A CAS review will offer ASU an opportunity to compare academic advisement practices against national standards in a manner similar to an accreditation self-study. These standards are endorsed by the National Academic Advising Association and may be reviewed on the NACADA Web site, or one may seek more information by contacting Jill Simons, director of Academic Retention Services in the Wilson Advising Center, at jsimons@astate.edu. While ASUJ grows and develops in so many ways, we must not lose sight of our duty and obligation to guide our students for the best possible academic and personal outcomes in each of their lives. Faculty and staff, please join me in doing everything reasonably possible to make the "Student Early Alert System" and our whole advisement system the best that they can be!
Reflections on Health Care Reform
My experience in using our current health care system during October in connection with my back surgery (a lumbar laminectomy/decompression procedure) has caused me to focus much more on the ongoing health care reform debate and to consider how that might affect our excellent ASU self-insured plan administered by Blue Cross/Blue Shield of Arkansas. In my case, Blue Advantage Administrators of Arkansas sent me an "Explanation of Benefits" showing my physicians' charge of $9,108 for surgery and radiology services. The charges were "adjusted" to $1,910 and the insurance paid $1,528 and my minimum responsibility is $382. The hospital bill has not yet arrived. Thus, to say that I am happy to have health insurance is an understatement. How will "health care reform" impact our coverage and its costs?
To place our nation's current dilemma on health care in context, I believe one must go back approximately 100 years to when our university was founded and when the landmark report, "Medical Education in the United States and Canada," researched and written by Dr. Abraham Flexner of the Carnegie Foundation for Advancement of Teaching, was issued. Over a two-year period, he visited each of the 155 medical schools then in operation in the United States and Canada. His 1910 report advocated that medical training and practice should have a scientific basis. This then novel concept had been pioneered at a few medical schools including those at Johns Hopkins University, the University of Michigan, McGill University, and the University of Pennsylvania. He further advocated for fewer M.D. graduates. After his report was issued, American medical schools adopted higher admission and graduation standards, and began to adhere to the methodology of mainstream science in their teaching and research. Since many of the early 20th century medical schools fell short of those standards, about half of them were either closed or merged and the number of M.D.s produced in the country was drastically reduced. As a result of this transformation of medical education and the changes in the medical profession, the availability and affordability of medical care became an issue, but the competence of physicians and the quality of care in this country and in Canada greatly improved. See Cooke, Irby, Sullivan, and Ludmerer, "American Medical Education 100 Years After the Flexner Report," 355 N. E. J. of Med. 1339 (September 28, 2006); Kessell, "Price Discrimination in Medicine," 1 J. of Law & Econ., 20 (October 1958). Cf. Flexner Report.
Out of these developments grew the first health insurance pioneered by hospitals that wanted to fill their empty beds and who devised a system, developed by the Baylor University Hospital in Dallas, of marketing health insurance plans to employee groups, such as public school teachers and others.
In the 1930s and 1940s, employers began to offer health insurance as inducement to attract and retain the best workers. This trend was accelerated by an Internal Revenue Service ruling in 1943 that employer-based health care should be tax free to the employee. Another law enacted by Congress in 1954 made the tax advantages of these types of plans even more appealing. According to a recent National Public Radio story, the percentage of population being covered by health care plans rose from nine percent in 1940 to 63 percent in 1953. By the mid-1960s, 70 percent of the population was covered by some type of private, voluntary health insurance plan. See Blumberg and Davidson, "Accidents of History Created U. S. Health System," NPR, Oct. 22, 2009. With the adoption of the Medicare and Medicaid programs in 1965 covering senior citizens and certain categories of low income individuals, coupled with the developments described above, the perfect environment for the runaway costs of medical care that we are facing now was in place.
Dr. Vernon L. Smith, a 2002 Nobel Laureate in economics and professor at Chapman University, has cogently postulated that this system of third party payers, namely the private insurance companies on the one hand and the federal and state governments on the other (in the case of Medicare and Medicaid recipients), creates disincentives to keep medical costs in check. He outlines the problem this way: "The health care provider, A, is in the position of recommending to the patient, B, what B should buy from A. A third party -- the insurance company or the government -- is paying A for it." He goes on to note that this type of arrangement is "an incentive nightmare." He believes that any system that works will have to be structured "whereby third-party payment is made to the patient, B, who in turn pays A, supplemented with any copayment from B for the services." See the Wall Street Journal article.
In an editorial in the autumn 2009 issue of Blue and You, Mark White, CEO and president of Arkansas Blue Cross and Blue Shield, has a somewhat similar argument and notes that his organization supports health care reform because the "rate of growth in health care costs today is not sustainable for the long term." After reiterating that he believes every American should have access to high quality, affordable health care, he states that the most significant issue facing health care today is cost and any reform proposal that does not address that issue effectively should not be adopted. His suggested solution is changing the method of payment to doctors, hospitals and other health service providers from "fee-for-service," where patients see specialists and undergo tests and procedures with no one coordinating the care they receive from one doctor to the next, to a system in which doctors and hospitals are paid to treat patient's "medical episode," rather than each medical service provided. Further, he argues that improvements in health information technology are desperately needed so that the health plan, the doctor, the hospital and the patient together have access to the information they need to best treat each patient and get their claims paid. A similar point has been made in a recent article in Time magazine in its Oct. 26, 2009 edition, "A Healthier Way to Pay Doctors," by Jeffery Kluger.
So, how does all this relate to us here at ASU and the complex health care reform bills currently being considered by Congress?
First, as my personal experience last month confirms, we have a very good health insurance plan in place for our university system. It is a self-funded plan, adopted in 1993, administered by Blue Cross and Blue Shield of Arkansas through its subsidiary, Blue Advantage Administrators of Arkansas. Blue Advantage supervises our "ASU Preferred Provider Organization Employee Health Benefit Plan" and charges us fixed administrative fees to process and pay ASU employees' claims, which are reimbursed by our campuses based on a split of premiums between the university and the employee. We also maintain a "stop loss" insurance policy which protects the university against individual claims over $175,000. As shown by the graphs below, relatively speaking, premium increases over the last decade have been less than would have been expected given the exploding costs of healthcare in the U. S.
Also, since we know that in addition to our co-pay obligations, each time we use our health insurance our individual premiums may rise to absorb that cost, we have a strong incentive to stay healthy and not use our health care insurance unless absolutely necessary.
Second, with approximately 46 million people in America without health insurance of any kind, many feel there is a social obligation to make quality health care available and affordable to this group. However, Brian Sullivan of Fox Business Network notes in his blogthere is a difference between health care and health insurance since anyone who shows up at an emergency room of a public hospital can be treated, and many can afford health insurance but elect not to buy it, and many more just do not sign up for government programs for which they would qualify. Nevertheless, health care costs for indigent care are passed on in cost increases to those who can pay, and any influx of additional people signing up for government programs will increase costs for these programs, such as Medicaid. In addition, providing health care for the millions of uninsured Americans who truly cannot afford to pay will cost billions.
Third, the health care reform bills now winding through Congress are projected to cost between $750 billion and $1 trillion dollars over the next decade. With annual federal budget deficits now running in excess of $1 trillion, Congress must find a way to pay for any expensive new health care "reform." Various schemes are being considered - "soak the rich," tax existing premium health plans, lower benefits and payments and increase optional coverage premiums in the Medicare program, require beneficiaries of current employer-sponsored health insurance plans to pay income tax on the value of these "fringe benefits" they receive from these plans, etc.
There is no easy answer to this dilemma. Although all agree something must be done, every special interest is lobbying furiously to protect its turf from additional health care costs, amid partisan bickering in Congress among the members of the two major political parties. It is likely some type of health care reform legislation will pass Congress in the near future, and it will cost those of us who enjoy good coverage from our existing health insurance plans or Medicare much more in the future. The Wall Street Journal claims that private insurance premiums could triple (The WellPoint Revelation, W.S.J. p. A22, Oct. 28, 2009). Let us hope and pray that our political leaders can devise a reform plan that will get health care costs under control, so that as a society everyone has access to affordable health care as we here at ASU now enjoy, but in the process our leaders will not destroy the good things about our existing system of affordable health insurance, nor impose unfair and excessive new taxes on any segment of our society. Let the debate continue over "a public option," mandated insurance for all, increased taxes, high hospital and physician costs, new incentives for keeping costs lower, and giving consumers better tools to compare health care costs. The debate is healthy for America! Whether the new plan ultimately adopted will be remains to be seen!
Visits from Jonathan Sandys and Chanda Washington
As I mentioned at the close of my First Friday last month, I had a surprise visit from British Prime Minister Winston Churchill's great-grandson, Jonathan Sandys, a Churchillian scholar in his own right, who was brought by my office by Dr. Gil Fowler. Mr. Sandys was on campus for a visit in the Lecture-Concert Series. A relatively young man, I found Mr. Sandys easy to talk to and I regaled him with a story of my time as a student in England in the 1960s when I would go down to London and visit Hyde Park Gate, across the street from where his great-grandfather had a house and still lived, to listen to soap box speakers of every stripe. I hoped to see the great man coming from or going to his house, but never did. I always was puzzled as to why the British people voted Prime Minister Churchill out of office shortly after World War II and I mentioned this to Mr. Sandys. I was pleased to hear his views on that subject that the British people thought Winston Churchill was a good war leader, but not the best person to lead needed peace time reforms in England.
Dr. Joel Gambill brought another visitor, Ms. Chanda Washington, an ASU alumna who is now an editor at The Washington Post, and I was gratified to learn of her successful career and excellent opportunities that she seized after graduating from ASU in 1995. She was on campus for the Journalism Alumni Speakers Series.
Dr. Charles Carr
Also in September, I attended a reception for Dr. Charles Carr who was retiring, not from the university, but as the chair of the Department of English and Philosophy after long and distinguished service in that position. It was much fun to hear his colleagues roast him in some ways, but show obvious fondness and pleasant memories of his many years of service to the Department of English and Philosophy and to the university. Thank you, Chuck!
Remembering Mike Medlock
Finally, I want to mention the death of the chairman of the ASU Board of Trustees, Mr. Mike Medlock, who died on Oct. 28 at the MD Anderson Hospital in Houston. Irene and I were honored to spend an evening with Mike and his wife, Lynda, and Les and Jeanne Wyatt on Aug. 13, 2009, shortly before he returned to Houston for further treatment. That evening he was radiant, happy, and not at all focused on the very serious medical procedures he had in front of him. He fought a good fight with his illness, and died with dignity surrounded by those he loved. He provided excellent leadership on our Board of Trustees, he was constantly concerned about the welfare of our students, faculty and staff, and he will be greatly missed by not only his family and close friends, but all of us in the ASU community.
As we look forward to the Thanksgiving holiday and the end of the semester, let us all be thankful for our many blessings and the wonderful, family, colleagues and friends who surround and support us.
Robert L. Potts