At the Faculty of
Arts and Sciences (FAS) meeting on November 4, a rare standing-room-only crowd
of professors raised objections to two recent University actions they
associated with the central administration.
The first,
concerning research
that monitored attendance in classes without the teachers’ or students’
knowledge, is discussed in a separate report.
The second resulted
in an outpouring of passionate criticisms of the changes
in health benefits unveiled September 3, which will subject faculty members
and nonunion staff employees in Harvard’s benefit plans to coinsurance and
deductibles for hospitalizations, surgeries, and diagnostic imaging beginning
in 2015—potentially exposing families to new costs of up to $4,500 per year. At
the end of that discussion, faculty members present voted unanimously for a
motion calling on the University to rescind the benefit changes.
The practical effect
of the vote, if any, is uncertain: the annual open-enrollment period for
benefit elections begins today and concludes November 19. But the criticisms
revealed both substantive objections to the benefits themselves, and
dissatisfaction about communication between the faculty and University administrators.
This report covers the substantive and underlying issues, and provides some
context for disagreements about decisionmaking generally—in recent years, and
earlier.
(In accordance with
FAS rules for coverage of its meetings, in the detailed accounts that follow,
only speakers who have granted permission can be identified, quoted directly,
or associated with paraphrases of their remarks. Where such permission has not
been secured, the accounts remain anonymous; if permission is granted after
publication, this account will be updated accordingly.)
A Question on Medical Benefits
During the October 7 FAS meeting, professor of history Mary Lewis rose to question the new
health-benefits program, saying, “It’s asking those most at risk to pay
more”—whether they or a family member contend with a chronic condition or
suffer an acute medical problem. Imposing deductibles and coinsurance payments,
she said then, undercut the insurance mechanism of spreading risk across
populations. She asked how the new program design could be reversed.
Provost Alan Garber,
to whom the University Benefits Committee (UBC) reports, responded at length.
(The UBC is an advisory group of faculty members with healthcare expertise and
administrators who have fiscal and management responsibilities in various
schools and elsewhere.) Garber, whose scholarly field is studying the
effectiveness of various healthcare procedures, said that the committee had
spent the prior two and a half years examining the problem of rising
health-benefits costs.
(When the benefit
changes were promulgated in September, the community was told that benefit
costs “have grown
to consume 12 percent of the University’s budget [from 8 percent] over the past
decade”—figures that proved, on subsequent analysis, to be technically correct for the decade beginning when the UBC started
its latest review, but not solely because of health costs, and not during the most recent 10-year
period.)
The UBC also worried
about the need to prepare for future
healthcare inflation, Garber said. Accordingly, the committee sought to
moderate the growth in health costs by balancing the premiums Harvard and
employees pay; protecting those covered from very high medical costs;
preserving equity for lower-income employees (through reimbursement of part of
out-of-pocket costs); and better delivering high-value care. The balancing act
resulted in an expected
decline in premium costs for 2015 (versus a projected increase), and higher
costs borne by employees who incur higher medical expenses—but with caps of
$1,500 per individual and $4,500 per family per year. The result was not
perfect, the provost said, but he felt it was a useful step toward sustaining
generous health coverage. The
committee had rejected the alternative of offering a low-premium insurance
option that funneled beneficiaries into narrower networks of low-cost
providers. (One political problem for Harvard, in medically expensive
Massachusetts, is that some of the highest costs are associated with its
renowned, affiliated teaching hospitals, particularly in the Partners
network led by Massachusetts General and Brigham and Women’s hospitals.)
Lewis said that the
result still felt “regressive,” and worried particularly about the “real
difficulties” the increased financial costs might impose on junior faculty
members. The community ought to absorb the costs on their behalf, and on behalf
of lower-paid staff members, she said.
A Motion against the New Health Plan
In preparation for
the November 4 meeting, Lewis advanced this resolution for faculty debate:
That
for 2015 the President and Fellows be asked to replace the currently proposed
health care benefit plan with an appropriately adjusted version of the 2014
health benefit package, maintaining the 2014 plan design.
The
motion was followed on the agenda with these explanatory notes from Lewis:
• In
effect this motion aims to institute a moratorium on the proposed changes,
particularly in light of the fact that the UBC’s recommendations were based on
inaccurate assumptions as to how and when benefits costs rose as a proportion
of the overall university budget. Costs rose over a decade ago (between 2002
and 2004) but have remained largely flat as a portion of the budget since.…This
information was not accurately conveyed to the UBC. The policy change was
instituted as a fait accompli, without allowing opportunity for FAS faculty
deliberation. More information and a more inclusive and transparent process are
needed before any changes are instituted. Along with procedural issues, the
proposed design plan is problematic for the following substantive reasons:
• The
proposed plan transfers risk from the group to the individual. That is a
fundamental departure from previous plans, under which individuals with chronic
conditions or those unfortunate enough to face unanticipated medical
emergencies were protected under group coverage.
• The
proposed plan is regressive in heavily penalizing the most vulnerable members
of our community: junior faculty, faculty and staff with families, women
planning to have children, older employees, and those with chronic conditions.
The plan’s “protections” to mitigate costs to employees with lower salaries are
insufficient to offset the significant new financial burdens that may be
incurred.
• The
proposed plan affects not just “overusers” of health care, but anyone unlucky
enough to be confronted by sudden, unexpected medical problems in any given
year, or anyone who needs expensive diagnostic testing that is not considered
“routine” under the new plan.
• In effect the proposed plan will constitute a severe pay cut for
those in need of health care. It shifts financial burdens onto faculty and
staff at the very moment they are most in need of protection: when they fall
ill.
The Debate Joined: “Harvard
Can and Should Do Better”
Thus warned that the faculty would take up the motion
for debate, opponents and proponents of the benefit plan came to the meeting
prepared. Lewis led off with a sharp, passionate statement:
It is wonderful to see so many
people here and so many colleagues who have taken time from their sabbaticals
to return for a discussion as important as this one. Your presence here is a
reminder that Harvard University is, as President [Drew] Faust just said a few
minutes ago [during an earlier part of the FAS meeting], a community of ideas
and ideals; we are not just a business; we come together when it is ethically
vital to do so; we don’t just clock-in hours. Indeed, the conferral of honorary
degrees upon new faculty and newly tenured faculty [earlier in the meeting] is
a time-honored ritual of coming together as a community of scholars. It was in
recognition of the communitarian spirit of Harvard University, that I submitted
the motion that is before you.
At the October FAS meeting, I asked
President Faust how and when the recently announced health benefits policy
could be reversed. In the wake of posing that question, I have been contacted
by scores of faculty and staff from several different schools thanking me and
sharing their anxieties about the impact this policy may have on them. It is
this outpouring of concern that prompted me, in consultation with a number of
colleagues from whom you will hear in a moment, to submit the motion that is
before you. The hour is late, and we have a long list of faculty who wish to
speak….I am sure many of you also want a chance to speak. So I will try to be
as brief as possible.
Tomorrow is the first day of open
enrollment and if you have not yet examined your benefits enrollment guide in
detail, I suggest that you do so. When you do, you will notice that your
premiums are going down, in my case by exactly $10/month. More critically, your
out-of-pocket expenses—the newly instituted deductibles and coinsurance—are
going up, by as much as $1,500 per individual and $4,500 per family per year. If
you make less than $95,000 per year, these caps are adjusted somewhat. But
either way, in all but the healthiest years, you are likely to experience a pay
cut of some sort, and one that is determined solely by your medical luck.
Why did the University make this
change? Many reasons have been offered, none of which is very compelling. We’ve
been told that the university’s health benefit costs are rising relative to
salaries; in fact, the University’s health benefit costs as a proportion of
total expenditure over the last six years have been quite flat. Indeed,
nationwide, the medical rate of inflation has gone down for the past five years
and only recently has it shown a very slight uptick. The administration warns
us that health care costs might rise
more in the future, so we should plan ahead. Of course, they might also fall;
does the University plan to refund us some of our out-of-pocket expenses in
that eventuality? In all seriousness, though, it is quite possible that costs
will not rise dramatically; and yet the University is locking in this change
now.
… Finally, the provost has suggested
that if this reform had not been enacted, we would have experienced an increase
of 3.6 percent in our premiums. 3.6 percent of my premium would have been $15
more per month for me; and about $37 more per month for Harvard, if the same
contribution ratios had been maintained. Since insurance is about managing
risk, I would have willingly spent more per month in premiums in exchange for
some peace of mind.
We don’t actually know if
increasing premiums without adding deductibles or coinsurance was considered by
the University Benefits Committee because the entire process has been shrouded
in mystery. My purpose in mentioning this is not to discount the hard work the
UBC members put in, but to ask why the committee did not build in consultation
with the people who would be most affected, why it is so hard to discover
anything about what the committee was asked to do, how much money will be
saved, and what the alternatives were. In short, we still don’t really know how
we got to this plan. It is also clear that it has been implemented in a most
precipitous way. When I checked earlier this afternoon, the detailed plan
guides available on the University benefits website were for last year’s plans,
not the proposed plan. We’re frequently told that reforms such as Harvard’s are
designed to allow us to become better health-care consumers. I don’t know about
you, but when I make momentous decisions about my healthcare, I like to be an informed consumer.
Harvard can and should do better.
Harvard could do better by ensuring
that caring for one’s health is less stressful and uncertain, so we can focus
on what we’re here to do: produce new knowledge and teach the brightest minds
in the world. The beauty of the old system was that you knew what to expect so
you could focus on healing or having a baby. You knew that whatever tests,
procedures or surgeries your doctor ordered would be covered. In 2015, by
contrast, all but the most routine tests will trigger deductible and
coinsurance payments, the cost of which you sometimes will not know until the
test or procedure is complete.
If the University had announced
that it was instituting a pay cut for all faculty and exempt staff with chronic
illness in their families, plus those who contracted illness, got pregnant or
sustained an accident, it would have sounded absurd, but it would have been
more honest. Moreover, this pay cut will be timed to come at precisely the
moment when you are sick, stressed, or facing the challenges of being a new
parent. To be fair, the University cites various protections for “lower income”
employees that will be put into place. Yet, if you are in the two “lower”
income brackets, you will have to pay up to the same caps as the best-paid
employees at Harvard, save your receipts, and then have the difference
reimbursed after you’ve already paid the hospital. Why should people as vital
to Harvard’s mission as post-docs or non-union staff front the University money
while potentially defaulting on their own bills as a result?
Is Harvard a business that
transfers costs to its employees, reducing its expenses by shifting the burden
to people coping with serious illness? Or is Harvard a community where we
equitably share the risks that we all face as human beings and where health
care is a human right?
If Harvard were just a business, it
would not offer such generous financial aid to middle class students and their
families. Indeed, Harvard always has been more than a business. Let us keep it
that way.
It is too late to offer
rationalizations for this plan; that could have happened months ago through a
process that included a broader spectrum of faculty and staff in the
decision-making process; since that did not happen, we ask for a moratorium.
Lewis then attempted to
introduce follow-on speakers, but President Drew Faust, as chair, reserved that
power to herself, and designated Watts professor of health care policy Barbara
McNeil—chair of the department of health care policy at Harvard Medical School
(HMS) and a member of the UBC—to speak next. She, UBC chair Michael Chernew,
Schaffer professor of health care policy, and Joseph P. Newhouse, MacArthur
professor of health care policy and management (another UBC member), had
written an
op-ed in the morning’s Harvard Crimson,
“Why the Health Plan Changed,” to which she referred.
Addressing healthcare costs,
she noted that faculty members had received a graph from the provost, detailing
the rise of employee-benefit costs from about 8 percent of Harvard’s expenses
in fiscal year 2001 (correcting the earlier date, referred to above) to about
12 percent in fiscal 2004, and the oscillation of that ratio between 10 percent
and 12 percent through fiscal 2013. She observed that costs had been held
within that relative range in part because of changes made following UBC
analyses: consolidation of healthcare providers to focus on more efficient ones
and to enhance Harvard’s bargaining leverage with each; shifting the share of
premium costs slightly from the University to employees; and so on. She
acknowledged that the communications “could have been a little bit clearer and
more concise and timely about the changes that have been made over time.”
McNeil then introduced a new
set of data. From fiscal 2008 through fiscal 2013, she said, the University’s
spending on healthcare coverage (including
dental insurance) compounded at an annual rate of 6.8 percent. Excluding dental costs, the growth rate
during those years was 7.5 percent annually. Healthcare costs, including dental
coverage, represented about 5 percent of total
compensation costs (wages and salaries, plus benefits) in fiscal 2001; 6
percent in fiscal 2003; 7 percent from fiscal year 2004 through fiscal 2010;
and 8 percent in fiscal years 2011 through 2013. (Fiscal 2014 financial data
for the University will be released later this month; it is unknown whether a
comparable ratio for the healthcare component of compensation costs will be
made public.) In light of this growth, she continued, Provost Garber had
charged the UBC with finding ways to “ameliorate” the cost increases; the
committee had done so, drawing on representation from every faculty, with help
from a consultant, and analyzing Harvard’s experience and benefit programs relative
to those of peers. The committee had worked long and hard, analyzing myriad
ways “to cut down the expenditures to the University.” The benefit design that
resulted was credible, and in keeping with the offerings of peer academic
institutions.
Lewis’s and McNeil’s statements
set the tone for the ensuing debate, largely along the lines of individual
faculty members’ experiences, concerns, and worries about the effects of
benefit changes on lower-paid staff members, junior colleagues, and so on,
compared to economic and policy analyses presented to explain the UBC’s advice
to the provost.
Before proceeding to those
exchanges, the data points McNeil presented merit some analysis; the format of
the faculty meeting did not lend itself to that kind of pause and reflection. Harvard
has not disclosed its actual dollar spending on any specific category of
employee benefits—which include health and dental insurance, retirement plans,
disability coverage, presumably subsidies for daycare and other related
services, and such large line items as the employer share of Social Security
and Medicare payroll taxes (which automatically rise with incomes). Allowing
for rounding (the percentages are very likely approximations):
For fiscal 2010, applying 7
percent to total compensation costs (wages and salaries of $1.363 billion and
employee benefits of $0.426 billion) yields estimated University healthcare
costs of $125 million: 3.4 percent of total Harvard operating expenses. For
fiscal 2013, applying 8 percent to the same cost lines in that year ($1.553
billion and $0.507 billion) yields estimated healthcare costs of $165 million:
3.9 percent of total operating expenses.
That aggregate spending is not adjusted for the size of the
workforce. Employment data, formerly published in the University fact book, no
longer appears to be available, but the workforce is assuredly larger than it
was in fiscal 2010, during the height of fiscal stringency and after selective
layoffs, buyout and other retirement incentives, and severe limits on hiring.
It is known that the
workforce has grown from about 15,200 full-time equivalents during 2009 to
about 16,600 in 2013 (employment has been rising about 2 percent annually).
So some per capita adjustment in that
apparent $40-million increase in Harvard’s healthcare expense from fiscal 2010
to fiscal 2013 is warranted.
Finally, starting points may
matter. The increase in the proportion of total compensation costs accounted for
by healthcare costs after fiscal 2010 may reflect, in part, the widespread salary
and wage freezes in effect for many faculty and nonunion staff members during
fiscal 2010, to adjust the University’s spending to its reduced endowment: as
benefit costs continued to grow, their share of compensation expense would
necessarily rise. In the years since, increases in nonunionized staff and
faculty members’ wages and salaries have been relatively tightly compressed to
a couple of percentage points per year, perhaps compounding the shifting
effect. Members of the Harvard Union of Clerical and Technical Workers (the
leading staff union) have in fact received larger wage increases, which would
offset this effect somewhat—but they also have more generous, negotiated
healthcare benefits, which might tend to reinforce the relative growth of
health spending in Harvard’s overall compensation expense during this period.
Dueling Worldviews
The first faculty speaker to
rise in support of Mary Lewis’s motion was Wells professor of political economy
Jerry R. Green. On Election Day, one had to admire the political savvy of
enlisting him to the cause.
As an economist, he could
engage in discourse with the healthcare economists on the UBC as an equal. And
for faculty members and administrators with a longer memory, it was Green, then
provost, whom President Neil L. Rudenstine asked to lead a task force to “review
Harvard’s employee-benefits package and recommend ways to bring costs under
control” (as this magazine reported in March-April 1994)—in an era when medical
and dental expenses had risen from $16.2 million to $41.7 million, a 21 percent
annual growth rate. (Ironically, on a facing page, the magazine reported the
merger of Mass General and Brigham and Women’s to form their network—the focus
of contemporary concerns about the cost of medicine in metropolitan Boston.) In
June 1994, the Corporation adopted changes in health and other benefits to the
tune of $10 million—including cutting contributions to faculty pension plans
and setting off protests about inadequate consultation at the FAS faculty
meeting that November. Before then, as the magazine reported, Green had left
the provostship; declined to sign the report of the benefits committee; and
criticized the recommendations as both inefficient and counterproductive
(because they might discourage faculty retirements). And during the year, FAS
set about establishing a benefits-review committee, the precursor to the UBC,
intended to be a consultative body for such changes in the future.
Summarizing his work as a
microeconomic theorist who has focused on studying risk, insurance, incentives,
behavior, and their implications for policy, Green addressed the introduction
of a coinsurance element in Harvard’s benefit plan—“a significant new financial
risk” borne by those who have medical problems. He would, he said bluntly,
eliminate that provision and instead raise premiums, a step that would have
employees bear the costs, in aggregate, that the new plan intended those who
incur coinsurance to bear, without raising the University’s costs at all.
The impact of coinsurance, he
said, depended on its design. Because Harvard’s new provision aimed at
hospitalization, surgery, and diagnostic testing, it was hard to predict its
effect on the utilization of medical services. But the effect was likely to be
“financially and medically undesirable.” Unless utilization of services
changed, there would be no savings—so the success of coinsurance, from the
University perspective, depended in putting financial pressure on families at
precisely the wrong time. If coinsurance did
change utilization, might beneficiaries defer procedures or tests, resulting in
worsened health complications in the future, and higher costs? He referred the
audience to Eckstein professor of applied economics David Cutler’s Your Money or Your Life (reviewed here) as a primer on the keys to
health: timely diagnosis, follow-up appointments and care, compliance with
medications and other treatments, and active management of chronic conditions.
All are disincentivized by
coinsurance.
Behavioral research, Green
continued, indicated that “people do not choose wisely.” If they already engage
in wishful thinking, delay addressing problems, and so on when they are anxious
about an illness, coinsurance reinforces the counterproductive behaviors.
Imposing coinsurance constitutes “unfair, unnecessary, random transfers of
wealth”; would not cut costs; and could have tragic health outcomes. Green won
loud applause.
Joseph Newhouse, who conducted
the most famous controlled experiment on the effects of cost-sharing, spoke
next, reminding the faculty of the tension between moral hazard (use goes up
when costs go down, as insurance coverage is extended) and the transfer of
risk. From all evidence, he said, increasing coinsurance both reduces use of
care and increases risk for beneficiaries. But as his experiment, on a
population comparable to Harvard employees, had shown, the reduced utilization
of medical services had “no effects
on health.” Excluding routine doctor
visits and similar interventions (such as prescriptions)—which are not affected by the changes in Harvard’s
benefit design—people who are hospitalized less are less exposed to
hospital-induced infections and errors. This observation prompted laughter, but
Newhouse and other speakers noted the evidence on the very large incidence of
such adverse outcomes from medical treatments (and evidence that many other
medical services are simply ineffective). He also noted that increases in
commercial insurance costs are much higher than those in public programs
(Medicare and Medicaid, with regulated rates and government purchasing power),
raising the specter that Harvard could run into the Affordable Care Act’s 40
percent excise tax on high-cost insurance programs at some time in the future.
Alison Frank Johnson, professor
of history (who is also shouldering the demanding role of leading FAS’s effort
to revise its policy and procedures for cases of sexual assault), told about
receiving a call on September 23 from her two-year-old’s daycare center: he was
running a fever, she would have to fetch him. A doctor visit ($20 copay)
progressed from looking for an ear infection to revealing a low oxygen level to
an emergency-room visit ($75 copay) to overnight hospitalization. That night,
as her child was breathing through a mask, she was communicating with
colleagues to reschedule a graduate seminar, office hours, and a presentation the
next day, managing her other children, and coping with her fears. But, “I did
not have to ask myself where I would find $1,500,” she said, nor how that would
work compared to paying the mortgage, utility bills, or daycare expenses.
Although she is a tenured
professor and lives in a three-bedroom house in Arlington (a near-in suburb
with what passes for less unreasonably stratospheric housing costs, in Greater
Boston’s punishing market) and sends her children to public schools, Johnson
continued, she does not end the month with $1,500 readily available in her bank
account. If that was her situation, what would it be like for employees who are
paid less? She could earn more as a consultant, she said—work she in fact had
done. But she came to the University to do academic work. If Harvard now
considered full healthcare coverage a luxury, she said, the solution was to
work to make it available to others, not to “deny ourselves.”
Enders
University Professor Marc Kirschner, chair of the systems biology department
at HMS, offered a perspective different from that of his health-policy
colleagues in Longwood. Speaking on behalf of several HMS faculty colleagues,
chairs, and staff members “who are uneasy” about the changes in the benefits
plan, he said, “I recognize that others at Harvard had the best intentions in
trying to stretch the University dollars so that other priorities could be met”
(among them, likely, sustaining medical research, at a time when federal
sponsored funding is under great pressure). But, he continued, “the plan that
was announced fell particularly hard on vulnerable populations. It is a pay cut
whose impact depends on how poorly you are paid, and young families with
children bear the greatest burden. Although
the poorest-paid staff have not been subjected to the pay cut yet because they
are in the union, there is a category of very poorly paid employees that will
suffer the cut this year—postdocs,
most of whom are paid under $50,000.”
Kirschner said
that postdocs facing coinsurance of up to $1,500 per person would have to apply
for reimbursement from the University, and “This is a large number for those whose
take-home pay is less than about $3,000 per month.”
As for the
principle of cost-sharing (the deductibles and coinsurance that raise
employees’ cost of using medical services at the point of service), he said, “I
don’t believe that paying for health care for your sick child in an anxious
moment is morally equivalent to an impulsive purchase of expensive clothes.”
And as for Harvard’s internal reputation and fairness, Kirschner
turned toward Xander University Professor Douglas Melton, recently celebrated
for breakthrough stem-cell research aimed at treating Type 1 diabetes. He
said, “I know that much of the
work was done by poor hardworking postdocs, who because of their low pay are
specifically disadvantaged by the new healthcare plan. President Faust, if our
criticisms are in error, then we would all like to be enlightened, but the more
we read the policy and the more we see it defended, the more it seems like a
serious mistake, unworthy of our great University.”
Provost Garber thanked the
preceding speakers, and returned to the broader financial context. The UBC, he
said, indeed sought to lower healthcare costs borne by Harvard—for good reason.
He noted that in the
recent FAS annual report, dean of administration and finance Leslie Kirwan
projected an $81-million operating deficit for the faculty in the current fiscal
year—and other faculties have deficits, too. “There are some real financial
challenges,” Garber emphasized, raising serious questions about how to pay for
Harvard’s essential work.
About the purportedly
deleterious effects of increased medical cost-sharing, he observed, most peer
universities have such policies in place, and most U.S. employers have much
more extensive cost-sharing than Harvard has proposed. Garber had studied with
Jerry Green, he said, but Green had presented a theoretical argument. Newhouse’s study provided empirical evidence that higher
cost-sharing reduced the use of care and its overall cost, “with no adverse
effect on health” in populations like Harvard’s. That sounded counterintuitive,
Garber said, but the laughter that greeted such observations did not come from
doctors (Garber is a physician), who knew only too well about the incidence of
infections and errors induced in hospital settings. Fears that increasing
employee costs would reduce health are “not borne out by the data.”
The University, he said, took
concerns about health outcomes very seriously. The UBC had drawn upon
“extraordinary expertise” and thought through the changes in benefits “very
carefully,” but Garber realized that the plan design was “not perfect” and could
be improved in future years. Harvard had asked its medical providers to make
changes to reduce costs and improve care, but they were not able to do so for
2015. Nonetheless, “We will never rest,” Garber said, in pursuit of securing
the best possible access to high-quality care. Doing so, he continued, was not
easy in the context of Greater Boston’s high costs. The UBC had examined
narrower networks, but determined that that possible change would be a bad outcome
for the Harvard community.
The time for the regular
faculty meeting having expired, those present voted to extend the discussion by
20 more minutes.
A faculty member from one of
the quantitative disciplines rose to critique the administration’s claims about
rising healthcare costs and the threat they posed, in the long term, to
sustaining good employee benefits. He might as well commit suicide, he said,
because “my being alive now is unsustainable.” If costs accelerate in the
future, they could be addressed then. For now, the new plan design was proceeding
in “unseemly haste.”
Returning to Mary Lewis’s
monthly calculation, he said that continuing the 2014 benefits program into
2015 would cost Harvard $35 monthly for its contribution to his health
insurance. But to save that, he said, the University chose to adopt a
cost-sharing plan that would distract faculty members from teaching and
research as they worried about coinsurance and deductibles; punish junior
faculty members during the most critical phase of their careers; and damage the
University’s appeal as a place for professors to come to work. At the very time
Harvard sought to attract and support young women faculty members in scientific
and technological fields, he said, the new plan design would have a
“disproportionate effect on women.” In all these senses, he said, the
imposition of coinsurance and deductibles “destroys a huge amount of value” in
return for the University’s $35 monthly savings in its healthcare costs for
faculty members in his situation.
Higgins professor of
geochemistry Charles Langmuir extended the analysis, saying that compensation
overall accounted for a decreasing
share of the University’s operating expenses—so, “Where’s the problem?” He and
10 colleagues had gone back into the payroll system and discovered that since
fiscal 2006, Harvard’s costs for health insurance had in fact inflated much
more slowly than individual employees’ costs (about 3.5 percent per year vs.
5.5 percent per year, respectively). He attributed the phenomenon to “bracket
creep” (the employee share of premiums is progressive) and prior changes in
benefits (such as the general shift of more premiums to employees). How could
that situation be “sustainable” for employees, Langmuir asked, and
“unsustainable” for their University employer?
With coinsurance and deductibles
in place, he warned, elderly faculty members, those who become ill, and those
who are pregnant could expect their healthcare costs to increase 30 percent to
50 percent in 2015.
In the meantime, the University
could make data on benefit plans much more readily available, rather than
forcing professors to spend valuable research time to exhume it, and could
“answer questions without changing the subject.” He urged administrators to be
transparent, share information, and then, “Let’s talk about it.”
Lisa McGirr,
professor of history, the last speaker, ended the debate on a high-speed,
high-decibel, emotional note. The new benefit design, she said, “undermines the
very principle of insurance: spreading risk across the whole community.” To the
extent it is justified by the fear of future costs, there is ample time for
transparent discussion before imposing plan changes. During the October 7
meeting, FAS dean Michael D. Smith, summarizing his annual report, had
highlighted advances in diversifying the faculty and attracting women, but
noted departures by junior faculty members in the sciences before their tenure
reviews. Given that such junior professors must navigate their professional
challenges and childrearing simultaneously, McGirr said, “This benefit policy
moves in the wrong direction” for that cohort especially. A new mother faces a
$1,500 payment for medical services during delivery, and could easily face
another, equal coinsurance payment if the newborn has any complications—an
“onerous financial burden” under circumstances that are not rare. Because women
in their thirties to fifties use more healthcare than others, the new benefit
design is “a gender and family issue.” Such issues required “a transparent
discussion before benefits change.”
At that point, faculty members
versed in parliamentary procedure called the question, moving the debate to a
vote on the motion before time for the meeting expired. By voice vote, the
motion carried unanimously.
Aftermath and Assessment
As noted, the practical
implications of the faculty’s vote are uncertain. Employees need to elect their
benefit choices annually, and to enroll accordingly—not only for health, life,
and disability insurance, but for flexible-spending accounts, which expire each
year. The two-week period for doing so is now under way, on the basis of
information provided to employees by mail and online. And then the University
has to process and effect their elections, during an unusual period when it is
making a transition to new pharmacy-benefits and flexible-spending plan
administrators.
Nor is it the case, at Harvard
or elsewhere, that nonunion employees have much of a say about, or a binding
vote on, their benefits. Uncompetitive benefits will over time render an
employer unable to attract or to retain desirable employees—but the
accommodation is largely through people voting with their feet.
And certainly faculty members
are sensitive about the value of their benefits, as is anyone who works for a
living and has to depend on America’s crazy-quilt system of providing health
coverage. So it is unsurprising that they would turn out in large numbers, and
be vocal, in response to the abrupt transition from no coinsurance or
deductibles to plans that would potentially expose them to costs big enough to
get their attention. The skirmishes in 1994 are ample precedent for that.
Finally, it should be noted
that FAS and the provost have crossed swords with regularity. It was he who
communicated
the plans to consolidate the University’s prized libraries, downsizing
staff, during a period of great concern about budgets for acquiring materials,
support for expert bibliographers, and other worries;
told
professors, by forwarded e-mail, at the end of the 2011-2012 academic year that their
customized financial-planning services were being terminated;
unveiled
plans to relocate much of the School of Engineering and Applied Sciences to
Allston—plans that, though widely embraced now, were at the time described
in anger by senior faculty members of the school who said they had been
consulted in a perfunctory manner, or not at all (one characterized the
decision as dropping “the Allston bomb” on the school); and
led Harvard’s partnership
with MIT to form edX for online learning technologies—a $30-million
investment, at a time of presumed financial constraint, that was unveiled in the spring of 2012 but without benefit of a faculty advisory
group until one was announced well into the next winter, in early 2013.
One of the faculty’s own, Carswell professor of East Asian languages
and civilizations Peter
Bol, was the respondent to Harry Lewis’s question, earlier in the November 4
faculty meeting, about teaching research that impinged on the sanctity of the
classroom—without soliciting teachers’ or students’ consent. But he spoke
in his capacity as the provost’s designated leader for HarvardX and the
teaching and learning initiative.
Disagreement between faculty members and administrators is
inherent in any university. On many issues, ranging from benefits to the
libraries, from HarvardX to the enormous undertakings in Allston, the provost
is, in Drew Faust’s administration, the point person. He has a lot on his
plate. He has a lot of challenging decisions to make. And as he notes, the
University is simultaneously pursuing very ambitious agendas while watching its
purse. It cannot make his work more pleasant, nor strengthen the way the
community operates, if the interactions between the provost and the FAS become
routinely fractious.