Skip to content Skip to navigation

Our Approach to Managing Employee Health Care Costs

Your annual Benefits Open Enrollment period will be here soon, from Oct. 26 through Nov. 13, 2015.  To better understand Stanford's approach to managing growing health care costs, it is important to review how we go about designing health care benefits.


In designing health care benefits, we consider four key principles:

Female faculty member running along the Dish trail

  • Helping you stay healthy. We cover the cost of preventive care for you and your family with no co-pays or deductibles, and also provide you access to recreation facilities and healthy living classes to help you and your family maintain a path to good health.
  • Providing access to excellent care. We are fortunate to be surrounded by several health care providers that provide quality service, including Stanford Health Care, Kaiser, Palo Alto Medical Foundation and others.
  • Managing rising health care costs. We will continue to explore ways to minimize our overall health care costs so that we can continue to offer comprehensive health care benefits.
  • Keeping you informed. We will continue to provide information and perspective to help you and family members keep up with changes so you can make the most of your health care benefits.


Designing Plans to Keep You Healthy


Over the years, we have proactively helped employees get on a path toward improved health by implementing a number of strategies:

Farmer's market booth, people selling and buying fresh produce


  • Increased promotion on wellness and disease prevention. We have enhanced our benefits offerings to focus on health improvement. For example, the BeWell@Stanford wellness program continues to offer cash incentives to participants who are actively making meaningful lifestyle changes to improve their health. In addition to wellness benefits, we subsidize the Stanford Coordinated Care (SCC) program, which helps employees with chronic illnesses improve their quality of life and navigate their health care experiences.
  • Expanded access to outpatient mental health providers. In 2015, non-network coverage was enhanced for the Blue Shield EPO and High Deductible Health Plan, as well as Stanford Health Care Alliance (SHCA). This provides you more flexibility in accessing psychologists, therapists, counselors and other mental health services.
  • Encouraged health care marketplace competition. The introduction of the Stanford Health Care Alliance (SHCA) in 2014 has meant greater competition, and as a result, we expect to see a number of new and different health care plans and provider partnerships. This means more options for you to choose from.

Managing the Growing Cost of Health Care


In addition to offering health benefits that support the varying lifestyles and well-being of our employees, we must also continue efforts to keep health care costs manageable.

Keeping health care plan costs low for you and the university has been a challenge. National health care spending costs continue to climb, and according to recent reports, are expected to grow 5.8% annually through 2024.

Doctor or nurse wearing green scrubs and stethoscope holding piggy bank

The reasons for this include:

  • Increased numbers of patients with chronic illnesses;
  • Increased aging population;
  • Poor lifestyles and obesity; and
  • New costly drugs to treat chronic illnesses.

In addition to the above, spending is fueled by the increased use of fee-for-service health plans (when doctors/hospitals get paid for each service performed, e.g.. PPO) verses managed care (HMO-type plans, e.g.. Kaiser).

Stanford remains one of the few employers in the Bay Area to offer free employee-only coverage. That means we pay 100% of the lowest-price plan for employees that cover themselves. The cost differential between the lowest-price plan and the more expensive plans are increasing over time, which means the difference in your semi-monthly contribution will also continue to rise. The lowest-priced plan for 2016 will be the Stanford Health Care Alliance (SHCA).

“While many community members might prefer that Stanford simply contribute more, employee health care benefits have been absorbing an increasing share of the university’s operating budget, constraining the funds available for salary increases and other benefits,” said Randy Livingston, Vice President Business Affairs & CFO.

What You Can Expect

Male staff working at office computer

One way to slow down rising plan premiums is to increase co-pays, deductibles and out-of-pocket maximums. You can expect increases in these for 2016, and possible increases in 2017 and 2018 if the Affordable Care Act’s (ACA) excise “Cadillac” tax remains unchanged.

Stanford is not the only employer exploring changes to keep health care costs down. In a survey done recently by risk management and human resources consulting agency Towers Watson, 84% of employers predict moderate to significant changes to their health care benefit programs for full-time employees over the next three years. 

Other industries are implementing more aggressive strategies such as implementing an extra surcharge for enrolled spouses, mandatory enrollment in wellness programs, and increasing rates or medical plan premiums based on biometric results.

"We want to be transparent about changes to our programs and share information early so that our employees are informed and can make the best decision for their health needs,” said Neal Evans, Stanford’s Health Benefits Director. "Our approach will focus on solutions that allow the university to stay aligned with our core mission while continuing to provide sustainable benefits to our employees within the legislative and financial requirements.”