Benefits May Not Be Accessed!: Penn State and the Transformation of Benefits Policy in the Contemporary American Public University

(Pix © Larry Catá Backer 2016)

To protect systems of benefits, benefits may not be accessed! That forms the core of the operational policy of the contemporary American public university.  The most successful benefit systems are those in which employees do not make claims; the ideal system, is one in which medical costs are shifted from plan to employee. A principal object of contemporary American universities is to socialize its employees into the belief that this premise is necessary and inevitable and that the ideal benefits program is one in which the recipient of the benefit pays its costs. And it is necessary and inevitable as universities transform themselves into insurance companies--adopting both the characteristics and behaviors of the more  forward looking leaders of that field of economic activity.

Penn State  provides a useful example of this national trend  that requires, as a necessary element, "socializing the current state of . . .  medical benefits and setting future direction on plan design and cost sharing."  This Post examines the nature and effects of this trend toward the transformation of benefits--from conception to operation within the contemporary American university.  

I have been writing about the way two distinct trends in contemporary university administration are converging.  The first  touches on the development of core approaches to the construction and use of employee benefit programs.  These are built around principles of eugenics (see e.g., here)  The second touches on the socialization of employees.  These have as their object employee internalization of the emerging policy frameworks as if those were the only possible way of understanding issues and thus become  complicit in embracing new ideologies of benefits without objection (see e.g., here). Both trends become more refined where, as in an increasing number of large institutions, a third important trend emerges--university self insurance--that is when universities embrace necessarily, the business culture of insurers as against their own employee populations. The culture of insurers, aggregated with eugenics and social engineering policies increasingly produces the policy structures around which benefits programs are built, and the administrative efforts to get employees both to accept this state of affairs as "normal" and to change their behaviors, without complaint, and to conform to an unassailable "reality." 

The result is profound, and ought to be profoundly disturbing:  

1-the university has become, it has assumed the role of, an insurance company; 

2-its employees are now premium paying consumers (benefit contributions, co-pays, deductibles, etc.) generating income; 

3-the costs of insurance companies are driven by payouts and by the administrative costs of running the operation

4-consumer (employee) premiums, in the form of "contributions" can be used to offset the costs of administration and subsidize payouts (an in the ideal system might cover all such costs)

5-variable costs are driven almost entirely by claims, then the object of the insurance company (university) must be to reduce access to payouts

6-a "profitable "benefits" program, then, is one that reduces the insurance company (university) exposure to claims which are not subsidized by employee premiums and that leaves universities with two options pursued simultaneously (a) increase aggregate premiums and (b) reduce access to benefits.

7-benefit reductions can be achieved in a variety of ways all of which can be framed as "necessary" and "inevitable" because of "markets" or "employee bad behavior with respect to utilization" or "bad lifestyle choices" that can be corrected. 

8-but at its core: the foundational principle of benefits policy at the modern American university is this: to reduce costs benefits must not be accessed! And the machinery of shared governance is then deployed to socialize employees to accept these operational premises and to manage employee behavior to happily conform to its requirements.

The result is simple but perverse--where universities assume the role of insurance companies they appear also to embrace the culture of insurance companies.  Benefits are no longer understood as part of compensation, or even (if conceptually disagreeably so) a means of ensuring enterprise productivity through a healthy workforce.  Instead they are understood as a cost that can successfully be avoided by shifting effective risks and obligation for payment from the insurance company (university) to its insured (employees). But this works only if two conditions are met: first the university must continue to adhere to the formal structures of befits, to appear to provide benefits even as they shift effective costs to the beneficiaries, and second they must convince the beneficiaries that is is natural and the only possible way of understanding the "economics" of benefits and the "options" available to universities. And the result--the university appears to confer a benefit which is partially paid for by the beneficiaries themselves and with respect to which the benefit becomes a cost whose value to the university increases as it is reduced--irrespective of the collateral effects on those covered. 

In other words universities must engage in this radical transformation while keeping up the appearance that notion is changing in the nature character and delivery of benefits, and by convincing its subject populations to the belief that there are no other choices.  While quite effective as a matter of power and social control, these first principles of benefits in the contemporary American university (see, e.g., here) deserve more than a thoughtless bending of the knee in the face of power, especially buy those who still purport to retain some voice in shared governance.   

Penn State University provides a perhaps useful example of this change in the policies and behaviors of American universities.  It is not unique.  It represents an example of collective thinking among similarly situated universities which tend to develop consensus policies and act in a concerted manner through knowledge networks anchored in their various trade associations. 

The contours of this new approach will be made at the January 2016 meeting of the University Faculty Senate. The presentation will be made available as soon as they become public.  The object, in part is informational transparency--to convey the policies and policy consequences to benefits that have already been embraced by university officials.  The second is to nod in the direction of shared governance by permitting faculty representatives to react to this declaration of policy.  The third is to use the occasion to further the process of socialization--to convince faculty that is is the only possible course given that this policy is the only possible way of approaching benefits--their role in the university, their purpose, and its value (calculated as a contribution to the overall marginal addition to university productivity).  

What makes this possible, of course, is that no alternatives will be considered.  The university has put its resources behind this foundational set of premises and has invested heavily in plans for its operationalization.  Alternatives would have to be conceive and developed using resources the than those of the university--a guarantee that unequal resources will produce a given (and desired) result for administrators. No fault there--this is politics with an object.  It is regrettable that the administrators who so eagerly embrace this policy as less eager to be quite bluntly honest about its consequences.  But of course that is the reason that socialization is necessary--to make such blunt explanations of consequences unnecessary. And by making such discussion unnecessary, by marginalizing as objections as uninformed by people who do not have command of the information marshaled (and controlled by officials), it avoids the necessity of justification of this course of action.

But one wonders whether it is necessary for the American university that decides to insure itself to also embrace the sensibilities and culture of an insurance company--a private enterprise whose principle object is to make a profit from the manipulation of the relationship between risk of payouts against the revenues of premiums and other investments.  That approach would seem to be contrary to the public service mission of many state universities.  But one does not know--there has been no discussion of the sort.  It begs the question about the role and value of benefits --that is it avoids the important questions of the character of benefit payments, its contribution to productivity, the effects of cross subsidies in universities with medical schools, etc. These questions might be incomprehensible or irrelevant to human resources and high administration officials whose duties require them to adopt the cultures of financial officers and insurers. And, indeed, because one is dealing with financial officers and insurers, rather than with university policies--it may be difficult even to frame the questions appropriately. But one wonders whether those sensibilities--useful when appropriately managed--become instead the foundational governance philosophy of the public university.