Harvard Ideas on Health Care Hit Home, Hard
WASHINGTON — For years, Harvard’s
experts on health economics and policy have advised presidents and
Congress on how to provide health benefits to the nation at a reasonable
cost. But those remedies will now be applied to the Harvard faculty, and the professors are in an uproar.
Members
of the Faculty of Arts and Sciences, the heart of the 378-year-old
university, voted overwhelmingly in November to oppose changes that
would require them and thousands of other Harvard employees to pay more
for health care. The university says the increases are in part a result
of the Obama administration’s Affordable Care Act, which many Harvard
professors championed.
The
faculty vote came too late to stop the cost increases from taking
effect this month, and the anger on campus remains focused on questions
that are agitating many workplaces: How should the burden of health
costs be shared by employers and employees? If employees have to bear
more of the cost, will they skimp on medically necessary care, curtail
the use of less valuable services, or both?
“Harvard
is a microcosm of what’s happening in health care in the country,” said
David M. Cutler, a health economist at the university who was an
adviser to President Obama’s 2008 campaign. But only up to a point:
Professors at Harvard have until now generally avoided the higher
expenses that other employers have been passing on to employees. That
makes the outrage among the faculty remarkable, Mr. Cutler said, because
“Harvard was and remains a very generous employer.”
In Harvard’s health care enrollment guide for 2015, the university said it “must respond to the national trend of rising health care costs, including some driven by health care reform,” in the form of the Affordable Care Act. The guide said that Harvard faced “added costs” because of provisions in the health care law
that extend coverage for children up to age 26, offer free preventive
services like mammograms and colonoscopies and, starting in 2018, add a
tax on high-cost insurance, known as the Cadillac tax.
Richard
F. Thomas, a Harvard professor of classics and one of the world’s
leading authorities on Virgil, called the changes “deplorable, deeply
regressive, a sign of the corporatization of the university.”
Mary
D. Lewis, a professor who specializes in the history of modern France
and has led opposition to the benefit changes, said they were tantamount
to a pay cut. “Moreover,” she said, “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.”
The
university is adopting standard features of most employer-sponsored
health plans: Employees will now pay deductibles and a share of the
costs, known as coinsurance, for hospitalization, surgery and certain
advanced diagnostic tests. The plan has an annual deductible of $250 per
individual and $750 for a family. For a doctor’s office visit, the
charge is $20. For most other services, patients will pay 10 percent of
the cost until they reach the out-of-pocket limit of $1,500 for an
individual and $4,500 for a family.
Previously, Harvard employees paid a portion of insurance premiums and had low out-of-pocket costs when they received care.
Michael
E. Chernew, a health economist and the chairman of the university
benefits committee, which recommended the new approach, acknowledged
that “with these changes, employees will often pay more for care at the
point of service.” In part, he said, “that is intended because patient
cost-sharing is proven to reduce overall spending.”
The president of Harvard, Drew Gilpin Faust, acknowledged in a letter to the faculty
that the changes in health benefits — though based on recommendations
from some of the university’s own health policy experts — were “causing
distress” and had “generated anxiety” on campus. But she said the
changes were necessary because Harvard’s health benefit costs were
growing faster than operating revenues or staff salaries and were
threatening the budget for other priorities like teaching, research and
student aid.
In
response, Harvard professors, including mathematicians and
microeconomists, have dissected the university’s data and question
whether its health costs have been growing as fast as the university
says. Some created spreadsheets and contended that the university’s
arguments about the growth of employee health costs were misleading. In
recent years, national health spending has been growing at an
exceptionally slow rate.
In
addition, some ideas that looked good to academia in theory are now
causing consternation. In 2009, while Congress was considering the
health care legislation, Dr. Alan M. Garber — then a Stanford professor
and now the provost of Harvard — led a group of economists who sent an
open letter to Mr. Obama endorsing cost-control features of the bill.
They praised the Cadillac tax as a way to rein in health costs and
premiums.
Dr.
Garber, a physician and health economist, has been at the center of the
current Harvard debate. He approved the changes in benefits, which were
recommended by a committee that included university administrators and
experts on health policy.
In
an interview, Dr. Garber acknowledged that Harvard employees would face
greater cost-sharing, but he defended the changes. “Cost-sharing, if
done appropriately, can slow the growth of health spending,” he said.
“We need to be prepared for the very real possibility that health
expenditure growth will take off again.”
But
Jerry R. Green, a professor of economics and a former provost who has
been on the Harvard faculty for more than four decades, said the new
out-of-pocket costs could lead people to defer medical care or
diagnostic tests, causing more serious illnesses and costly
complications in the future.
“It’s
equivalent to taxing the sick,” Professor Green said. “I don’t think
there’s any government in the world that would tax the sick.”
Meredith
B. Rosenthal, a professor of health economics and policy at the Harvard
School of Public Health, said she was puzzled by the outcry. “The
changes in Harvard faculty benefits are parallel to changes that all
Americans are seeing,” she said. “Indeed, they have come to our front
door much later than to others.”
But
in her view, there are drawbacks to the Harvard plan and others like it
that require consumers to pay a share of health care costs at the time
of service. “Consumer cost-sharing is a blunt instrument,” Professor
Rosenthal said. “It will save money, but we have strong evidence that
when faced with high out-of-pocket costs, consumers make choices that do
not appear to be in their best interests in terms of health.”
Harvard’s
new plan is far more generous than plans sold on public insurance
exchanges under the Affordable Care Act. Harvard says its plan pays 91
percent of the cost of services for the covered population, while the
most popular plans on the exchanges, known as silver plans, pay 70
percent, on average, reflecting their "actuarial value.”
"None
of us who protested was motivated by our own bottom line so much as by
the principle,” Ms. Lewis said, expressing concern about the impact of
the changes on lower-paid employees.
In
many states, consumers have complained about health plans that limit
their choice of doctors and hospitals. Some Harvard employees have said
they will gladly accept a narrower network of health care providers if
it lowers their costs. But Harvard’s ability to create such networks is
complicated by the fact that some of Boston’s best-known, most expensive
hospitals are affiliated with Harvard Medical School. To create a
network of high-value providers, Harvard would probably need to exclude
some of its own teaching hospitals, or discourage their use.
“Harvard
employees want access to everything,” said Dr. Barbara J. McNeil, the
head of the health care policy department at Harvard Medical School and a
member of the benefits committee. “They don’t want to be restricted in
what institutions they can get care from.”
Although
out-of-pocket costs over all for a typical Harvard employee are to
increase in 2015, administrators said premiums would decline slightly.
They noted that the university, which has an endowment valued at more
than $36 billion, had an unusual program to provide protection against
high out-of-pocket costs for employees earning $95,000 a year or less.
Still, professors said the protections did not offset the new financial
burdens that would fall on junior faculty and lower-paid staff members.
“It
seems that Harvard is trying to save money by shifting costs to sick
people,” said Mary C. Waters, a professor of sociology. “I don’t
understand why a university with Harvard’s incredible resources would do
this. What is the crisis?”
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