Tuesday, January 6, 2015
The Harvard Crimson
November 12, 2014
Harvard's Health Benefits Unfairness
(Authors listed below)
Last week, the Faculty of Arts and Sciences voted unanimously in favor
of a motion asking the President and Fellows to suspend changes to the
health benefits offered faculty and non-union staff for 2015. In
justifying the benefits changes, the University offered four main
explanations for its addition of deductibles and co-insurance: (1) the
cost of benefits relative to the overall budget; (2) parity with peer
institutions; (3) social science on containing health care costs and (4)
the future financial health of the University. In advancing these
explanations, the University has offered information that is incomplete,
incorrect, deeply misleading, and ethically troubling.
The second argument offered in favor of the health benefits changes has
been that we need to remain in line with our peers. We contend that the
only peer pressure Harvard should heed is that which makes us a better
research university. Increasing salaries and benefits might do this if
it allowed Harvard to recruit and retain the brightest minds in our
fields of research and teaching, as well as the post-doctoral fellows
and staff needed to support these research and teaching endeavors.
Perhaps the most distressing argument advanced in favor of the changes,
however, has been one that draws on a social science experiment from the
1970s to suggest that a co-insurance system, where the insured must pay
a percentage of after-deductible costs, is the best way to contain
health-care costs. At the November FAS meeting, Provost Alan M. Garber
'76 and members of the University Benefits Committee asserted that
because the RAND Health Insurance Experiment, or HIE, demonstrated a
reduction in healthcare utilization without decreasing overall
well-being, the new Harvard plan will do likewise.
We assert that, on the contrary, the HIE is irrelevant to the present
benefits proposal before us.
The HIE randomized individuals into different insurance plans (some
received health insurance free of charge, while others faced a range of
co-insurance options). It found that those paying a higher percentage of
costs visited primary care physicians less frequently and reduced their
health-care expenditures as a result. But copays for regular physician
visits have long been standard and are already part of Harvard's plan.
What Harvard now proposes is further extending cost-sharing to
hospitalizations, surgery, and diagnostic testing via co-insurance.
The HIE's measurement of outcomes is also irrelevant to the matters that
concern all of us. The study looked at indicators of general health such
as blood pressure, visual acuity, and propensity to smoke. The relevant
question for today's Harvard is not whether going to one's primary care
doctor more often makes one smoke less, but whether a diagnostic test
ordered by that doctor could save one's life, or detect an illness in
time to allow for a less invasive, and perhaps in the long run, less
Co-insurance is not only of questionable utility in the 21st century—at
a time when diagnostic testing is much more effective at influencing
outcomes than it was in the 1970s—it also unethically transfers risk and
expense to the most vulnerable in our community.
We often hear that Harvard is the apex of academic research and teaching
institutions, and that part of its success is due to its sense of
community. The University ignored that community when it embarked on a
secret and non-consultative planning process and disregarded the strong
concerns that faculty have about their own health and that of less
well-paid members of our community.
The result is a plan that imposes a serious financial burden on those
with chronic illness or who face medical emergencies for themselves or
their families. This plan is based on a flawed process, on a misguided
charge to the University Benefits Committee, on misinformation about our
peers, and on outdated research that is not relevant to the current
situation. It is unfair to the most vulnerable members of our community,
and not worthy of our great university.
Jerry R. Green, John Leverett Professor in the University and David A.
Wells Professor of Political Economy
Alison F. Johnson, Professor of History
Marc W. Kirschner, John Franklin Enders University Professor of Systems
Mark Kisin, Professor of Mathematics
Charles H. Langmuir '72, Professor of Geochemistry
Mary D. Lewis, Professor of History
James J. McCarthy, Alexander Agassiz Professor of Biological Oceanography
Lisa M. McGirr, Professor of History
Richard F. Thomas, George Martin Lane Professor of the Classics
Mary C. Waters, M.E. Zuckerman Professor of Sociology
Christopher Winship, Diker-Tishman Professor of Sociology
The New York Times
January 5, 2015
Harvard Ideas on Health Care Hit Home, Hard
By Robert Pear
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.
"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."
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.
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."
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."
"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?"
Comment by Don McCanne
Peering into Harvard's academic cocoon, there are two lessons we can
take home. One has to do with the insularity of the Harvard academic
staff as they consider their own health benefit program, but the more
important lesson has to do with the insularity of the health policy
academics at Harvard and other institutions regarding the design of
optimal systems of health care financing.
When we have a new national standard for health insurance that has an
actuarial value of 70 percent (patients pay an average of 30 percent of
their health care costs) based on the benchmark silver plans offered in
the insurance exchanges established by the Affordable Care Act, it is
astonishing to hear the outrage expressed by the Harvard academic
community over the reduction of the actuarial value of their plans to
the almost unheard of level of 91 percent! They would pay on average
only 9 percent of their health care costs.
That said, they are right. They should be able to receive all essential
health care services without paying anything out-of-pocket at the time
they receive care. Other nations have proven that you can provide first
dollar coverage at a per capita cost that averages half of what we spend
in the United States. Placing financial barriers in the way of health
care access is not only unnecessary, it is frequently harmful.
The first lesson here is that the insularity of these academics did not
allow them to think beyond the needs of themselves and the needs of the
"less well-paid members of our community" - the Harvard community, that
is. It is difficult to watch the expression of their outrage over their
comparatively modest reduction in benefits, leaving them with
platinum-level plans, when they remain silent on the deficient plans
that most of the nation has to deal with. From their academic towers,
they have the luxury of being able to sound off about the health care
injustices that so many in the nation face. But they didn't do it. They
merely whined about the injustices of their own solid-platinum insurance.
But then there is the academic health policy community. They are still
fixated on the misinterpretations and extrapolations of the RAND Health
Insurance Experiment (see the Harvard Crimson excerpts above). They
continue to insist that when patients have health care needs, they must
buy a ticket to enter the health care arena, partially invalidating
their prepayment arrangements (i.e., health insurance). That there are
better ways to improve value without erecting financial barriers to care
seems to be lost not only behind the blinders that these health policy
academics are wearing, but also behind the earplugs that they must be
wearing as well. They see and hear no evil, but they sure do speak evil!
When are those of us outside of the moat protecting Harvard's insular
compound finally going to take over the policy reins? Soon, I hope.
at 9:32 AM