Professors at Harvard University are unhappy about changes to their health insurance benefits that will require them to pay more for their plans, according to a story published in the New York Times that has quickly spread across right-wing outlets.
Particularly since many of the health policy experts at Harvard helped craft the Affordable Care Act, conservative writers have been quick to point out the irony: Ivy League elites are now unhappy with some of the changes under the very law that they championed several years ago.
But, as multiple health policy writers have pointed out, the changes coming to Harvard actually represent the implementation of some of the more conservative policies in the health law that are intended to reduce health costs over the long term.
Harvard University is requiring faculty to pay more out of their own pockets for deductibles and co-pays. Essentially, when they interact with the health care system, they’ll pay a little bit more than they used to — 10 percent of the total charges until they reach the out-of-pocket limit of $1,500 for an individual and $4,500 for a family. Meanwhile, their annual deductibles are rising to $250 and $750, respectively.
According to the New York Times, the chairman of the university benefits committee acknowledged that employees will now pay more than they’re used to for health services. But he also said that’s the point, at least in part, “because patient cost-sharing is proven to reduce overall spending.”
That refers to the traditionally conservative notion of “skin in the game” — in other words, the theory that requiring enrollees to pay for their interactions with the health sector will cut down on unnecessary doctor’s visits, tests, and procedures. This is what has driven the rise of high-deductible policies that offer low premiums but that require enrollees to pay more when they actually use their plans. Obamacare opponents typically argue that the law doesn’t do enough to encourage this kind of cost reduction strategy.
One way the Affordable Care Act does pursue this goal is by penalizing companies that offer overly generous benefits to their workers, under the assumption that those plans lead to excessive tests and services, ultimately driving up the cost of care. The law’s so-called “Cadillac tax,” which will level an excise tax on high-value plans beginning in 2018, is one of the reasons that Harvard says it decided to restructure its benefits. That tax remains somewhat controversial because — as illustrated by the outraged Harvard professors — reducing benefits is never a popular move among beneficiaries.
“Indeed, Harvard’s reforms show that in some ways, Obamacare has pushed the health-care system moderately in the direction conservatives favor, by encouraging employers to shift more of the cost of care onto employees,” Jonathan Chait argues in New York Magazine.
Even aside from Obamacare specifically, the dynamics at Harvard University are simply reflective of a larger trend in the health care sector, as costs have been rising and employers have been looking for ways to cut back on benefits to save money. Over the past decade, workers’ health insurance premiums have been growing as their wages have been stagnating.
“That’s the classic dilemma that pretty much every company in America currently faces,” Vox’s Sarah Kliff writes in reference to the recent changes at Harvard University. “Do they keep spending more and more on health benefits, at the cost of giving workers raises? Or do they make employees pay more and face the wrath of an angry professor with a brand new co-pay?”
Despite the frustration over the impending policy changes, Harvard professors still enjoy particularly generous benefits. Their new plan will cover an average of 91 percent of their health costs, and their new annual deductibles are still much lower than the average deductibles for people with employer-sponsored insurance. On average, individual deductibles grew from $826 in 2009 to $1,217 in 2014.
“The changes in Harvard faculty benefits are parallel to changes that all Americans are seeing,” Meredith B. Rosenthal, a professor of health economics and policy at the Harvard School of Public Health, told the New York Times. “Indeed, they have come to our front door much later than to others.”