The University announced today that under
its health-benefits program, Harvard’s nonunionized employees would become
responsible for annual deductibles of $250 per individual and $750 per family,
and coinsurance equal to 10 percent of costs, for hospital expenses, surgeries,
diagnostic testing, and outpatient services, effective January 1, 2015. The
individual out-of-pocket maximum for such expenses is $1,500 per year; for
families, the ceiling is $4,500 (present limits are $2,000 and $6,000). Above
these thresholds—toward which continuing copayments for office visits and
prescriptions will count, too—Harvard resumes paying 100 percent of the costs.
(For people enrolled in the point-of-service [POS] and
preferred-provider-organization [PPO] health plans, rather than health
maintenance organizations [HMO], the deductibles for out-of-network
care remain $750 per individual and $2,500 as a family maximum, with maximum
out-of-pocket costs of $2,500 per individual and $7,500 per family for
out-of-network care—but the plan participants will pay a 30 percent coinsurance
share for such care, up from the present 20 percent.) As mandated by the
Affordable Care Act, preventive care
(annual physical and gynecological exams, well-baby care, immunizations, annual
screenings for cholesterol, and so on) remains covered at 100 percent.
These changes align University health
benefits for nonunionized employees more closely with national norms—but they
may well come as a surprise to faculty and staff members accustomed to
Harvard’s traditionally full insurance coverage. The changes, signaled in
recent financial reports (see “Harvard Financial Context,” below), say something
about how University leaders see the institution’s challenges. They also touch
on the wider national discussion of healthcare and employee benefits—areas into
which faculty experts have delved deeply in search of greater efficiency and
enhanced quality (see “Alternative Perspectives,” below).
Separately, the University will offer a
so-called “high-deductible health plan” linked to a Health Savings Account, to
which beneficiaries can make pretax contributions to fund their future medical
costs. As is typical of such plans, it combines lower premiums with higher
deductibles, coinsurance, and out-of-pocket maximums. (Such plans are typically
considered most suitable for people with a higher tolerance for risk, and the
means to absorb larger, less predictable annual costs—and to take advantage of
the tax savings available through the pretax funding mechanism. The New York Times on September 2 reported on the
increasing adoption of such accounts, and challenges of implementation.)
Most of the affected faculty and staff
members are enrolled in HMOs providing healthcare coverage through the Harvard
University Group Health Plan or Harvard Pilgrim Health Care, and currently are
responsible for copayments for medical office visits and prescriptions.
Participants in the HMO plans have been exempt from deductibles and coinsurance
until now, as have the POS and PPO subscribers for in-network services.
(Harvard insures some 16,000 faculty and staff members, including unionized
employees; covered lives total some 32,000 people, including dependents.)
The new health-insurance terms obviously
have cross-cutting effects on employees. If they require hospitalization,
surgery, or the other affected services during the year, they will now be
subjected to the deductible and coinsurance payments, but their premiums will decrease.
Harvard obviously expects that: the announcement of the change says, without
qualification, “For 2015, monthly premiums in these plans will go
down….”—apparently by somewhat less than 3 percent compared to 2014 rates. The
medical cost per covered person was increasing about 4 percent—implying that
without the changes in the insurance plans, premiums would increase
by about that magnitude next year: a swing of 6 percentage points or more
compared to the rates the affected employees are now expected to pay in 2015.
(Including gains in employment, Harvard’s overall—not per
capita—medical costs are increasing at about a 6 percent rate. The recent
unveiling of new, more expensive pharmaceutical therapies threatens to increase
the cost trend in subsequent years.) Thus, covered employees will enjoy lower
withholding for insurance coverage—but because Harvard pays 77 percent of total premiums on average, most of those
savings, and avoided cost increases, will accrue to the University. (The
Harvard share of premiums varies with insurance plan, income, and family size,
ranging from as much as 85 percent down to a percentage in the mid 60s.)
The University’s savings, and employees’
exposure to the new deductible and coinsurance charges, are limited in two
important ways.
First, as noted,
out-of-pocket maximum exposures per year are reduced—and
all copayments for routine services count toward the total (only medical copays
count toward such maximums now).
Second, the University
is maintaining its unusual commitment to progressivity in health insurance.
Premium costs are tiered, with Harvard assuming a higher share of the cost of coverage
for employees who earn less than $70,000 per year, a lesser share for those
earning $70,000 to $95,000, and a third, lower share for those with incomes
above $95,000. It has also offered a program to reimburse copayments above a
certain threshold (for in-network office visits and prescription drugs) for
employees earning less than $95,000. In 2015, this reimbursement program will
extend to the new deductible and coinsurance costs for employees earning less
than $95,000, with single limits—adjusted for income and family status—covering
all eligible expenses (office visit and
prescription copays, deductibles, and coinsurance), rather than the existing,
separate limits for the different categories of copayments. Thus, for example,
individual beneficiaries with a salary below $70,000 could get reimbursement
for combined costs exceeding $900 ($2,250 for families); those earning $70,000
to $95,000 are eligible for reimbursement for combined costs exceeding $1,250
for individuals and $3,125 for families.
Harvard
Financial Context
The University’s statement makes clear
the motivation for the changes. In an announcement e-mailed to affected faculty
and staff members, Marilyn
Hausammann, vice president for human resources, wrote:
Harvard,
like all employers, continues to grapple with health care costs that have
increased at a pace well over the rate of inflation for many years.
More generally, benefits have grown to consume 12 percent of the University’s
budget (from 8 percent) over the past decade.
Though we have taken a number of steps to moderate health cost
increases—and continuously review our benefits to ensure that they remain
affordable for faculty and staff, sustainable for Harvard in the long term,
comprehensive, and highly competitive—we need to do more to curb cost growth
and improve incentives for health plan participants.
As the accompanying preview of benefits
changes put it, should growth in benefits costs continue at the recent pace,
Harvard would find it “difficult to make the investments necessary to remain
preeminent as an institution, to maintain the quality and affordability of our
benefits, and to provide competitive salaries.” Accordingly, the resulting
“changes in the way health care costs are shared between Harvard and its
faculty and staff” aim to “curb cost growth, and just as important, to improve
our incentives for becoming better consumers of health care so that more
significant changes can be averted in the longer term.”
The context for such actions had been
established previously. In their message in the
annual
financial reports for 2012 and 2013,
then-University treasurer James F. Rothenberg and vice president for finance
Daniel S. Shore, Harvard’s chief financial officer, singled out
employee-benefit costs for special attention. In fiscal year 2012, they wrote,
“benefits expense has more
than doubled in the past decade to $476 million.” They termed that
increase “unsupportable…relative to actual and expected growth in the
University’s revenue” and declared that “with those costs continuing to increase
at unsustainable rates, Harvard—like its peers and indeed like most other
businesses—cannot simply continue with the status quo.” As noted then:
Although
healthcare is the largest component of employee benefits, several factors
appear to contribute to rising expenses. The trend factor—utilization and the
costs of medical care—is increasing, although apparently not at the
double-digit rates of a decade ago. The workforce is expanding, and salaries
and wages are increasing, making for higher payroll taxes. Interest rates have
fallen, making it much more expensive to pay for unfunded pension and retiree
healthcare costs.
In the near term, the University is addressing those costs
largely by effecting changes in healthcare benefits…and by increasing the share
of premiums that higher-paid employees will bear in calendar 2013. (Nonunion
employees earning less than $70,000 have paid about 15 percent of the cost of
health insurance; those earning $70,000 to $95,000 have paid about 20 percent;
and those earning more than $95,000 have paid about 25 percent. As of January
1, the University is increasing the share of costs for those two upper tiers by
about 2 to 3 percentage points.)
Unionized employees have resisted such
changes, and the issue has been the subject of protracted, difficult
negotiations in recent years. One implication of the new health-benefit
provision just announced is that the fringe-benefit rate applied to unionized
employees is now much higher than that for “exempt” faculty and staff members—a
gap in the high teens of percentage points.
[Updated 9-3-2014 at 4:25 p.m. to incorporate comments from the Harvard Union of Clerical and Technical Workers:
In a quick reaction to the University announcement, Bill
Jaeger, director of the Harvard Union of Clerical and Technical Workers, noted,
“We’re not yet directly affected. Our members are not subject to these
changes—although we expect the University will ask us to negotiate about the
possibility of their application to our members.” In general, he said, “This is a very
different kind of a health plan. It’s a radical change from our perspective,”
characterizing the new provisions as “going in the wrong direction. They aren’t
going to do anything to solve the real problems of healthcare costs. It’s a
short-term step in the wrong direction that shifts costs on to employees, and
from healthier employees to sicker people”—older people and those with chronic
illnesses.
Absent access to Harvard claim data, Jaeger continued, “It’s
hard to know how sharp the effect will be. But employees will pay a bigger
share of the health bill, and the employer less.” In light of recent data
documenting slower growth in health costs nationwide during the past five
years, he asked, “Why now?” He maintained that the University’s announcement
shows it is “jumping on a bandwagon—but it’s not clear whether that bandwagon is
headed in an appropriate direction.” ]
In fiscal 2013, total employee-benefit
costs increased 6 percent (in line with fiscal 2012), to $507 million. (Per-capita increases
were lower, reflecting the roughly 2 percent average annual workforce growth in recent years.)
Discussing financial disciplines in that year’s report, Rothenberg and Shore
wrote that some changes, “such
as reducing the growth rate of our benefits costs, can be more difficult since
they often are experienced at a more personal level. Yet these changes are
inevitable and will allow us to protect the integrity of the high-quality
teaching and research that has allowed Harvard to lead throughout the
centuries.”
And
indeed, as reported,
Harvard put into place changes in retiree health benefits, effective January 1,
2014, affecting nonunion employees
with more than five years to eligibility for coverage. Those changes reduce the
University’s share of the premium cost for the coverage, and to varying
degrees, increase the number of years of service to attain the maximum subsidy.
For employees hired after that date, the minimum years of service and the age
to qualify for coverage both increase; the number of years of service to attain
the maximum subsidy rises (by a decade); and the University will cap the growth
in its contribution to insurance premiums at 3 percent annually from 2020. In
the aggregate, these represent potentially large reductions in Harvard’s future
liability for retiree healthcare.
As of this writing, figures had not been
made available from the University for its actual spending on healthcare,
within the half-billion-dollar employee-benefits line in the fiscal year 2013
annual financial report (including health, pension costs, and other expenses
for active and retired workers), nor for the estimated dollar savings
anticipated in 2015 from the new health provisions.
Harvard
Insurance Context
“Harvard’s goal is really first and
foremost providing a compensation policy that is attractive to the employees it
wants to attract,” said Joseph P.
Newhouse, MacArthur professor of health policy and management at Harvard
Medical School (HMS), where he directs the division of health policy research
and education. “Like any major employer, it looks at its benefits relative to
the labor market—what it considers its peer institutions,” continued Newhouse,
who also holds appointments in the Harvard School of Public Health (HSPH),
Harvard Kennedy School (HKS), and Faculty of Arts and Sciences (FAS). As a
general matter, he noted, the University “compares rather favorably to those
institutions on health insurance”—which has implications for the composition of
compensation as a whole, including salaries and wages, and other benefits such
as pension and retirement plans.
Like many academic institutions, “We have
a very generous health-insurance plan, but even more so” at Harvard, said Katherine
Swartz, professor of health policy and management at HSPH. In
modifying its health insurance, she said (during a conversation preceding the
release of details concerning the new deductible and coinsurance schedules),
Harvard “is not doing anything radical at all.” As she wrote in “Cost-sharing:
effects on spending and outcomes,” a survey for the Robert Wood Johnson
Foundation published in December 2010, “A majority of people with
[employer-sponsored insurance] face a deductible before most of the covered
medical services are paid for in part by the plans”—and at that time, 16
percent of covered workers paid some coinsurance rate. (According to the Kaiser
Family Foundation’s 2013 Employer Health Benefits Survey, 78 percent
of covered workers were enrolled in plans with a general annual deductible that
year—although 59 percent of those in HMOs were not—and 61 percent of covered
workers had coinsurance requirements for hospitalizations.)
Newhouse’s and Swartz’s assessments carry
dual weight in the context of Harvard’s health-insurance decisions, given their
scholarly expertise and their membership on the University Benefits Committee
(UBC); Hausammann wrote in the preview of benefits changes that the actions had
been taken “after consultation” with the committee. Its 15 members include
health and public-policy scholars, financial and human-resources administrators
(among them Shore and Hausammann), and others from across the University,
serving in an advisory capacity to Provost Alan
Garber, himself a scholarly expert on the cost-effectiveness of various
healthcare procedures and policies.
Newhouse directed the 1970s RAND Health
Insurance Experiment, the foundational research that proved, as he said,
“people who had more cost-sharing did use fewer
[health] services”—that price influences people’s behavior when seeking medical
care. In the experimental cohort, which excluded the elderly, Newhouse said,
there were “no adverse effects of using less” care
among average members of the insured population, with the important exceptions
of those in the lowest 20 percent of the income distribution and people
suffering chronic illness—whose decisions on occasion to forgo healthcare
services as a result of higher costs imposed a health penalty. Swartz’s 2010
overview is a particularly comprehensive review of what is known about the
effects of such cost-sharing in the current healthcare context, with very different
insurance designs and even therapies (from powerful pharmaceuticals to such
technologies as MRI scans) from those in place during the RAND investigation.
As both professors point out, Harvard
must offer health insurance in an exceptionally expensive market.
“Massachusetts has one of the highest medical costs per person of any state,”
said Newhouse, “and much of that is in eastern Massachusetts.” Data compiled by
the Centers for Medicare and Medicaid Services show that Massachusetts costs
one-third or more above the national average (a level exceeded or approached
only by the District of Columbia and California). The hospital portion of those
costs is more than 40 percent above the national average (and presumably even
more skewed if one considers only metropolitan Boston).
The RAND finding that average people
suffered no adverse health effects from curbing consumption when their costs
for medical services rise is of course tantalizing to employers who provide,
and have traditionally paid for most of, health insurance. But there is also
significant concern that, as Swartz writes, “Health plans with high deductibles
and uniformly applied co-payments or coinsurance rates are often referred to as
‘blunt instruments’ for reducing
unnecessary health care expenditures because evidence is mounting that people reduce both essential and nonessential care”
(emphases added). Hence the importance of teasing out those effects—on health
outcomes, and on hoped-for savings in healthcare spending overall—in her
thorough review of a vast literature on such tools. Among her salient findings:
The declines in use of
care and spending documented in the RAND study came from lessened
patient-initiated services (for example, making an appointment to see a
physician), “rather than from lower intensity of services provided once a
person was seen by a health care provider.” That is, once a patient is in the
care system, cost-sharing through deductibles and coinsurance was not potent in controlling healthcare costs overall.
That matters because
most healthcare spending “is for a small share of the population.” In a given
year, “Half of all Americans
account for only 3 percent of all health care spending. While increased
cost-sharing may cause them to lower their use of health care, their reductions
will not significantly affect total spending or slow the growth in national
spending. At the same time, people in the top 5 percent of health care
expenditures account for about half of all spending—and they are generally very
sick people. Once they begin to seek medical advice and care, their subsequent
decisions about their options for medical treatment are generally unaffected by
cost-sharing.” Given this distribution of costs, higher
deductibles and coinsurance certainly redistribute monies among employers and
employees, but “We do not know if increased patient cost-sharing would reduce
the growth in total national health care spending.”
“Increased cost-sharing
disproportionately shifts financial risk to the very sick,” given the intensity
of their use of health services.
In this context—a very high-cost market
for medical services, escalating overall benefits costs for the University, and
concern about the incidence of cost-sharing measures such as the newly
introduced deductible and coinsurance provisions—Swartz said that as it
evaluated changes, the UBC was very careful to strike a balance. In advising on
the changes, she said, “We faced some really hard choices that we’ve tried our
best to be fair about.”
The new deductible and coinsurance levels
are not especially high by national standards, according to the Kaiser
Foundation data. Lowering the maximum out-of-pocket limits lessens the risk of
unexpected, shock costs for families. And the out-of-pocket reimbursement
mechanism, with its inclusion of all beneficiary
payments, appears to be an innovative procedure that, when combined with the
University’s progressive schedule for employee premium payments, has the effect
of further protecting those for whom the new costs could be disproportionate.
In the end, the changes are meant to save
the University money—an objective with which Swartz and several of her
health-economist colleagues are sympathetic—while maintaining a full-featured
benefits program.
Alternative
Perspectives
Not everyone embraces the approach of
sharing of health costs through deductibles and coinsurance, on several
grounds.
The economic critiques. As Joseph
Newhouse—a proponent of cost-sharing—noted, the basic economic effect is clear:
“People who had more cost-sharing did use fewer services”: for employed,
healthy, under-65 adults, on the order of one to two fewer office visits
yearly, and a 10 percent to 20 percent reduction in hospitalization. But the
reduction in utilization “seems to affect both efficacious and medically inefficacious
services.” (That accounts for the prevailing hypothesis on why using less care
did not result in worse health outcomes for the generally well population:
reductions in useful care were offset by reductions in care that was harmful or
counterproductive. That conclusion obviously does not
apply to someone with a chronic condition like diabetes or heart disease
cutting back on proven pharmaceuticals.) Or as Swartz wrote in her recent
survey, “[M]ost people do not distinguish between health care services or
prescription drugs that are essential and those that are not essential.” Hence
the bluntness of cost-sharing, and the need to shape it carefully—particularly
in earlier eras, when preventive services were not protected from such
instruments, as they are now.
“Behavioral Hazard in Health Insurance,” a recent
National Bureau of Economic Research paper by professor of health economics
Katherine Baicker (HSPH), professor of economics Sendhil Mullainathan (FAS),
and Dartmouth economist Joshua Schwartzstein in fact makes the case more
generally:
Attention matters: choice of care may depend on the salience of
symptoms, which is particularly problematic because many severe diseases have
few salient symptoms. Timing matters: people may overweigh the immediate costs
of care, such as co-pays and hassle-costs of setting up appointments or filling
prescriptions. Memory matters: people may simply forget to take their
medications or refill their prescriptions. Beliefs matter: people may have
false beliefs and poor learning mechanisms about the efficacy of different
treatments.
Accordingly, alongside the “moral hazard”
that insured people will over-consume
health services for which they are charged too little (the rationale for
copayments and so on), they model the behavioral hazards—mistakes or
biases—that cause them to underuse
high-value care.
As Swartz noted, because most health
services are consumed by very ill people, whose care is determined primarily by
providers, and only a very limited share of services is consumed by a large
part of the population, cost savings need to come from the remaining people
who, presumably, need medical care upon occasion. But can they then shop
effectively for such services?
Nancy Turnbull—senior
lecturer on health policy and associate dean for professional education at
HSPH, and a former member of the UBC—argues that coinsurance is “very
problematic” because “you can’t know the price of any service when you’re
getting it.” Most providers don’t provide price information, and most people,
at the time of need, are in no position, or frame of mind, to try to dig it out
and insist on getting the best deal. For a relatively simple decision—choosing
a generic drug versus a branded prescription at a higher copayment—Turnbull
says that most consumers can make the right decision (particularly because the
prescriptions have been vetted for them). But for more complicated services
where prices are not known, she rejects the idea that making “more responsible
consumers” by exposing them to part of the costs and reducing “our rapacious
use of medical care” is workable.
Three possible courses of action.
Most
employers, of course, have not hesitated to use cost-sharing to control their
health outlays, no matter these analytical concerns. How
might employers who are so inclined offer insurance benefits designed to
overcome some of these problems—protecting their own budgets while promoting
better care and cost savings (rather than just the reallocating expenditures
via cost-sharing)? That in fact is a field where Harvard health scholars have a
great deal of at least theoretical expertise.
•Better service delivery. At the
simplest level, Swartz laments limits on doctors’ office hours that push
consumers to emergency rooms during evenings and on weekends. Some physician
practices, she notes, do staff such services, but the need for lower-cost,
urgent-care services around the clock is pressing.
•Value-based insurance design. “I would
not discard patient cost-sharing as a set of tools just because it doesn’t
always work as we want it to,” said Baicker. “Well-designed cost-sharing can
improve healthcare outcomes” by reducing use of low-value services. The
clearest example of such effective design is the tiered copayments for
prescriptions, with generics costing users much less than the branded
equivalent drug. Such value-based insurance design, much studied by the Medical
School’s Michael E.
Chernew, Schaeffer professor of health care policy, who chairs
the UBC, aims to apply such disciplines much more broadly. The theory is that
experts can determine whether an intervention—surgery for back pain, stenting
an artery—is effective in various circumstances, and can apply tiered pricing
accordingly. The discipline is not perfected, Baicker noted (nor are patients
or providers, or even regulators like Medicare authorities, always willing to
do what the cost-effectiveness studies show: consumers who become ill want the
best available care, naturally). But it holds great interest, among health
researchers at least, given their findings that many procedures are not
warranted for many prospective patients. Better information, designed into
insurance plans, and greater patient sensitivity to prices, theoretically hold
great promise for effecting financial savings and enhanced health.
•Tiered networks and insurance. Providers
of medical service vary in price and effectiveness. The literature abounds with
examples, from the $400 MRI in a freestanding clinic versus the $1,000 version
in a hospital setting, to the cases documented in Elizabeth
Rosenthal’s continuing New York Times
series, “Paying Till It Hurts.”
Baicker noted that with sufficient information and will, providers could
be sorted out into those that provide lower and higher value for the care
dollars they receive. The policies offered through exchanges under the
Affordable Care Act aim to distinguish providers this way, she observed, and in
theory that should induce providers to compete to be in the preferred networks.
Insurers know how to “narrow” their networks of providers based on cost and at
least rudimentary measures of effectiveness—and Medicare is making more
information available on doctors, to complement the data it has long published
on hospitals.
If expert analyses can
be made of cost and value—of effectiveness—then that information could be
signaled to consumers (who may lack the capacity, individually, to make such
studies) by offering them different tiers of insurance plans, initially on the
basis of provider’s prices.
Eckstein professor of
applied economics David M. Cutler—a former member of the UBC, and now a member of
the Massachusetts Health Policy Commission (an
independent agency charged with developing policies to reduce the growth of
healthcare costs and improve the quality of care)—has written extensively about
this mechanism. Last December, in the New England Journal of
Medicine, he and two coauthors—writing about the deceleration in the
growth of U.S. healthcare spending—observed that patients could be rewarded
“for choosing providers and organizational arrangements…that are associated
with better outcomes and lower costs of care. Tiered networks constitute an
early version of this approach to consumer engagement.” A month earlier, in
“Hospitals, Market Share, and Consolidation,” published in the Journal of the American Medical Association, Cutler and
Fiona Scott Morton (of the Yale School
of Management) wrote of tertiary-care institutions, “[F]lagship academic
medical centers offering perceived higher quality care often wield enormous
market power.” They cited a report by
the Massachusetts attorney general finding wide differences in pricing but
“no correlation between hospital price and quality” in Harvard’s market area.
Cutler and Morton suggest insurance programs with differential cost-sharing:
“routine surgery could involve higher consumer cost sharing if provided at the
dominant health system in a market than in a less expensive one”—a tiered
network.
At a higher level,
Cutler and Morton argued, the incentives for care systems themselves could be
changed to encourage cost savings—the aim of nascent experiments with
“accountable-care organizations,” where providers share the savings, or the
excess costs, depending on how they perform relative to agreed-upon budgets for
an insured population each year. Finally, states could experiment with overall
expenditure restraints.
Both of the latter
measures are being pursued in Massachusetts—with the eastern part of the state
the epicenter of such work, according to Newhouse. It is in this market that
Harvard-affiliated academic medical centers—world-renowned for the quality of
their care, but also considered among the highest-price providers—loom
particularly large.
An ethical perspective. Critics
like Turnbull strongly favor a health system with providers competing to offer
insured health services for agreed-upon prices (the accountable-care model),
and with consumers offered various levels of service for differing insurance
premiums. That way, she said, consumers could make reasonably informed
decisions about what they were buying, at what price, before
they became ill or in urgent need of care—when they are least prepared to shop
around. (Of course, such differentiation could result in the unattractive
prospect that higher-paid employees opt for the “richer” network and lower-paid
staff members for the seemingly discounted one—a prospect most employers, and
employees, seem uneager to embrace, at least so far.)
More broadly, Turnbull said, the move
toward cost-sharing at the individual consumer level—particularly through
coinsurance—“means that people who use more medical services are disadvantaged
relative to those who don’t.” Turnbull noted that the move toward deductibles
and coinsurance is “part of nationwide pressures that all employers are
feeling”—a trend that is further along elsewhere than in Massachusetts, and
among other employers than Harvard. Still, she views steps toward cost-sharing
as in effect undoing some of what insurance is intended to do: moving from a
system of sharing risk, she said, toward one where, “more and more, you’re on
your own.”
Moving
Harvard A Bit Closer to the Rest of the World
The changes Harvard is introducing today
are relatively modest in the context of contemporary benefits design, but they
represent new circumstances for a workforce that has enjoyed its
fringe-benefits package. (In fact, the University’s plan is so competitively
attractive that it appears to be enrolling people who have competing plans
available through their spouses’ workplaces—a status no employer seeks, given
the costs.)
The University has clearly determined to
change the price signals faculty and staff members receive (and to pursue
negotiations about such changes with its unionized workforce)—but also, at
least initially, to buffer the effects and to lessen them for those who receive
lower salaries. In striking the balance among its budgets and health benefits,
it has taken pains not to impose enormous risk on any individual or family—a
point Newhouse emphasized as fundamental in any program of “shifting financial
risks,” particularly where shock losses from a medical crisis or chronic
illnesses are a factor. It has also had to balance those factors against the
interests of its affiliated, research-oriented, teaching hospitals—which are
under varying financial pressures, but with varying levels of market strength
and political clout, of their own.
The unfolding experiments in the
Massachusetts healthcare marketplace will have an important influence on what
further changes, if any, Harvard feels compelled to introduce in the years to
come. The interplay among University-affiliated actors involved in delivering medical
care, consuming it, balancing budgets, and assessing the effectiveness and
efficiency of health policies and services might well become an enlightening
conversation, not only within the University community but far beyond.
Read a Gazette
story about the benefits changes, with members of the UBC, here.
Disclosure: Although Harvard
Magazine Inc. is separately incorporated, employees receive health benefits
under the Harvard University insurance plans. Magazine employees who are not
members of union bargaining groups are affected by the health-benefits programs
and changes reported here.