ver the last few decades, we have witnessed a remarkable degree of medical progress. Our ability to treat cancer, heart disease, and autoimmune disease today bears little resemblance to how we treated such conditions even a generation ago.
One of the consequences of these advancements, though, is rising medical costs.
This tension between lifesaving progress and escalating expenses stresses the economy, employers, and the average citizen. As the founding chair of Harvard Medical School’s Department of Health Care Policy, I have devoted my career to understanding this dynamic and to seeking the best solutions for individuals and for employers who provide health care coverage for their staffs.
Institutions like Harvard are continuously grappling with how to provide high-quality coverage while continuing to be fiscally responsible. We look closely at the market and study both local employers and our peer Ivy League universities. By doing this we are able to offer plans that we believe are both competitive and, in many cases, favor lower-income workers. It is in this context that we consider changes to health insurance for unionized and non-unionized employees.
This is an important matter and one that I and others in the Harvard leadership take very seriously. But when examining the specifics of any health plan, it is essential that we never lose sight of the larger context.
A group of Harvard Medical School students have recently made the case that our lower-wage workers would be better off under the Massachusetts health exchange. I applaud their effort and their commitment to equity. Still, I would like to caution that this comparison isn’t quite as clean as it might appear at first. It’s important to consider a number of items before drawing conclusions. I would like to highlight two here:
An individual’s Harvard salary alone determines how he or she pays for his or her portion of the health care premium. Mass Health considers household income that comprises all earnings. In addition, Mass Health ties the individual’s share of the premium to the number of family members covered. Harvard, on the other hand, has a single-family rate regardless of the number of dependents. As a result, the premium for a family at Harvard may be less than the premium of a family covered by a Mass Health plan.
According to the Mass Health website, if your household income is $30,000, your employer’s plan is affordable if the lowest-cost plan to cover an individual is less than $241 per month. In 2016, Harvard’s lowest cost plan for dining services and other unionized employees was $91 per month for an individual and $246 per month for a family.
These issues have been placed in sharp relief given our ongoing negotiations with Harvard’s dining services employees. It is important to provide context about our health care offerings in that regard as well. Harvard is unique when compared to the majority of our peers and local employers, and certainly when compared to national averages.
Our benefits package includes an unusual tiered premium structure. Under the plan proposed by the university earlier this week, and adopted by unions representing more than 5,000 Harvard employees, next year the university will pay 87 percent of the lowest-cost premium for those in this new plan who earn less than $55,000 per year. According to the Bureau of Labor Statistics, the average employer covers 79 percent of an individual’s coverage, and 68 percent for a family.
To put some dollar figures on these statistics, nationally the average employee pays $127 a month for single coverage and $511 per month for family coverage. Among those in unions, those rates are $129 and $418, respectively. In the food service industry, it’s $140 and $536, respectively.
Under the plan most popular with Harvard’s dining services employees, monthly rates are $104 a month for individual coverage and $281 a month for family coverage. Harvard also has one of the lowest thresholds for individuals to earn full health insurance: 16 hours per week. These benefits are available year round, even if an individual works only during the academic year. This is also atypical in this industry.
Harvard has also proposed a reimbursement program to help economically vulnerable employees and their families with fees for office visit copays, prescription drugs, and other services if those costs start to mount. Once an employee or family member reaches the threshold for office visit copays ($180 for an individual and $440 for a family), he or she can ask to be reimbursed from this university-sponsored program. Similar programs exist for prescription drugs and other services.
Some have asked why Harvard does not use its endowment to offset health care costs. Much of the endowment is earmarked for specific purposes and as such any use beyond the terms of the original gift would violate the donor’s intention.
Harvard deeply values the contributions of all its union and non-union employees. That is why the university, working with experts like myself, strives to implement thoughtful and fair approaches that balance workers’ needs and preferences with the university’s core priorities of teaching and learning. We will continue to listen to all members of our community and demonstrate our commitment to offering plans that are fiscally sustainable and that effectively addresses all the complexities of modern health care.
Barbara J. McNeil, MD, currently serves as acting dean for Harvard Medical School. She is also professor and founding chair of the Department of Health Care Policy at Harvard Medical School, and professor of radiology at Harvard Medical School and at Brigham and Women’s Hospital.