Harvard’s low-income workers deserve affordable health insurance

There’s an outbreak of a hidden epidemic — unaffordable employer-based health insurance, especially for low-income workers — at Harvard, a place where it should never occur.

As medical students at Harvard, we were deeply troubled to learn that our university was proposing changes to dining workers’ health plans that would make essential health care unaffordable. After months of negotiation, the dining workers’ union voted to authorize a strike, which will launch on Wednesday if a deal is not reached. The campus has rallied around the workers, circulating a petition of support signed by 2,500 students, including us, in advance of federal mediation held earlier this week.

In the dining workers’ fight with Harvard, we see a microcosm of current challenges for health insurance across America.

The affordability of health insurance plans comes down to two factors: premiums and out-of-pocket costs. How affordable are employer plans? A team of Harvard medical students compared the plan Harvard proposed for the dining workers to what would be available on the Massachusetts health exchange. (State exchanges were set up under the Affordable Care Act, often called Obamacare, to facilitate the purchase of health insurance by individuals and families.)

For a family of three earning $30,000, the Harvard plan requires an employee to contribute a premium of $233 a month, while the health exchange has plans that require no premium at all. Harvard Medical School faculty and the World Health Organization have defined any health spending over 10 percent of annual income as a catastrophic expenditure. The Harvard plan comes perilously close to this with premiums alone. The cherry on top? Harvard’s plan also has higher co-pays than the exchange plans.

It is shocking that these low-income workers would be better off financially if they were not offered employer-sponsored insurance.

This may seem confusing. After all, exchange plans have been lambasted for their soaring costs. But the sobering truth is that the situation is worse among employer-provided plans. A recent Urban Institute study showed that total premiums were lower in exchange plans than in employer-provided plans in more than 80 percent of major US markets. In Boston, the premiums for exchange plans were 35 percent less expensive than employer plans. The gap would likely be even larger for lower-income employees, who would be eligible for more robust subsidies in the exchange plans.

Why are employer plans so expensive? Frankly, health care is expensive. The rising prices of prescription drugs coupled with the consolidation of hospital systems have made the deep-seated cost issues driving the Harvard dining workers’ fight that much more difficult to address. There are no silver bullet solutions. And while promising policy options are in the works, overall progress is likely to be gradual.

In the meantime, we must confront a key question: Who should bear the brunt of high health care costs?

The answer can be a matter of life or death. Landmark studies like the RAND Health Insurance Experiment have shown that increased out-of-pocket costs can jeopardize health outcomes, not to mention financial stability. For some people, higher out-of-pocket costs decrease utilization of health care in ways that don’t affect health outcomes. For the poorest and the sickest, however, extra expenses cause some people to forego essential medical services, leading to worse control of chronic health problems and increased risk of death.

Harvard’s proposal for its dining workers threatens to widen health disparities along lines of race and class. Many of the dining workers are immigrants, over half identify as people of color, and nearly half earn less than $35,000, a salary deemed insufficient to support more than one person in Boston according to the MIT Living Wage Calculator. Some workers, like Anabela Pappas, a 33-year veteran of Harvard, already struggle to manage chronic conditions like type 1 diabetes on a limited income. Increased health care costs for at-risk families like hers only worsens existing inequities in our system.

Innovation in health care is more likely to happen when big employers, rather than low-income workers, feel the burden of health care costs. Institutions like Harvard hold tremendous untapped power to implement novel programs and pressure health systems to make badly needed reforms. Now is the time for our university to take the insights generated by its economists and health policy researchers, like value-based insurance design, and implement them for members of its community.

Not every creative intervention will work. But only by moving beyond the status quo will we learn which new ideas have real benefits. Simply making poor families pay more for essential services like insulin prescriptions and hospital admissions is an unacceptable cop-out.

As physicians in training, we cannot stand by as the world’s richest university forces its most vulnerable employees to choose between dinner and a doctor’s visit. Harvard can do better, and this “better” can have a ripple effect on other unions, other universities, and other workplaces across the nation. Employers like Harvard must pursue real innovation, not simply balance their budgets on the backs of those least able to afford it — and least likely to survive it.

Micah Johnson and Sanjay Kishore are second-year students at Harvard Medical School.