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Harvard University’s Health Plan Joins the 20th Century

In an at-times amusing NY Times article, Harvard’s faculty are “outraged” at the University’s health plan changes made for the 2015 plan year. According to the article, in an ironic twist, some design changes are in response to the Affordable Care Act, for which some Harvard faculty served as an adviser to both Congress and the Administration.

Many of the changes adopted by the University involve additional employee cost-sharing, particularly in an increased deductible (all the way to $250 per year for individual coverage and $750 per year for family coverage), raised co-pays ($20 for a doctor’s office visit), and increased coinsurance amounts (an astounding 10 percent up to a maximum out-of-pocket amount of $1,500 for an individual and $4,500 for a family). According to one economics professor quoted in the article, cost-shifting to employees is the “equivalent to taxing the sick.” Finally, the employees’ premium co-share amounts are decreasing to help offset the increased utilization cost-share.

Yet many of these changes are those faced by virtually every US employer over the past decade. A $250 individual deductible? The average deductible for individual coverage in a US employer-sponsored plan is over $1,000. A $20 office visit co-pay went away for a typical plan in the 1990s. In fact, the maximum out-of-pocket cost under the Harvard plan is less than most US employees have just for a deductible, let alone any coinsurance.

Perhaps the faculty ought to realize that increasing health care costs reduces available dollars for things like salaries, research, and other university expenses. That reasonable employee utilization cost-sharing (and if accurate, the plan design outlined in the article is extraordinarily reasonable in today’s environment) has in fact been demonstrated to reduce overutilization of certain health care expenditures without jeopardizing the health status of individuals. Lastly, their faculty and other employees would be hard-pressed to find better (or even equivalent) coverage from other Boston area employers.

Welcome to the 20th century, Harvard faculty.

Posted on January 06, 2015 by GARY B. KUSHNER, SPHR, CBP, PRESIDENT AND CEO

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