Health Benefits to Cost 3.8 Percent More
After several years of significant increases in employee healthcare spending, Harvard’s overall healthcare costs will increase 3.8 percent in 2018 (down from last year’s 7 percent increase, and 7.3 percent the previous year). Employees’ monthly premiums will increase between 3 and 5 percent, depending on their chosen plan and salary tier. An employee in the lowest, sub-$55,000 salary tier selecting a popular individual plan would see an increase of 3.8 percent, from $79 to $82 per month; in the highest salary tier, an employee selecting a family plan would see an increase of 4.2 percent, from $477 to $497.
For faculty members and non-union staff, the benefits covered will remain largely the same as last year’s—no 2018 changes in medical coinsurance or deductibles, or in the plans offered, are scheduled—with the exception of a change in the University’s (separately offered) dental plan that will cover dental implants for more patients. Several unions—representing University police officers, security guards, and custodial workers—will see changes reflecting recent contract negotiations, among them the introduction of a sub-$55,000 salary tier. Workers in that tier receive a larger premium subsidy from the University and thus pay lower monthly premiums. The tier was first introduced in 2017 for members of the Harvard Union of Clerical Technical Workers and faculty and non-union staff members, as a trade-off for the introduction of new cost-sharing provisions. Because workers in the unions eligible for the new tier next year typically earn less than other University personnel, many are likely to benefit from the increased subsidy. The same unions’ members will also be exposed to a new requirement: copayments of $100 for certain hospital and emergency-room visits.
Employee compensation, including salaries and benefits, accounts for about half of University spending. The University’s healthcare-cost growth is driven largely by spending on prescription drugs and high-cost claimants: a small number of patients who account for a large proportion of spending. This year’s increases in employee premium costs still outstrip pay increases: this fiscal year, non-union staff members received raises of 1.5 percent.
Total office visits among covered employees decreased slightly after the introduction of annual deductibles and coinsurance for faculty and non-union staff members in 2015, but increased again in 2016 after coinsurance for some services was eliminated, according to the University Benefits Committee (UBC). Those changes may have been in response to the price incentives, reflecting a national debate on the value of copayments as a mechanism for encouraging patients to make more considered healthcare choices. A vocal contingent of faculty condemned the cost-sharing measures originally announced in 2014, after a period of rapid growth in the University’s healthcare outlays. In general, healthcare research has suggested that cost-sharing may decrease not only unnecessary usage, but necessary care as well.
Total University medical spending increased a relatively low 1.9 percent from 2015 to 2016 (the most recent year for which data are available)—from $221.8 million to $226 million: a lesser rate than in the preceding years. Interestingly, employee spending (including premiums and out-of-pocket costs, compiled by the UBC), has increased only slightly as a share of overall spending since the introduction of coinsurance, to 27.9 percent in 2016, from 27.4 percent in 2013.
The University’s relatively stable cost growth reflects a national trend in employer-sponsored insurance: premiums for those plans increased 3 percent on average in 2016, and 2.5 percent the previous year, according to a Kaiser Family Foundation survey. That rate of growth is down significantly from the previous decade, though this partly reflects increases in cost-sharing or reductions in benefits adopted by some employers to contain premium-cost growth. In Massachusetts, total healthcare spending increased 2.8 percent in 2016, down from 3.6 percent the previous year; the state has managed to get its spending growth rate down to among the lowest in the country, but its absolute level of healthcare costs remains among the highest.
Two new benefits will debut next year for all faculty and staff: dependent life insurance, which will allow employees to purchase up to $50,000 of life insurance for a spouse, with no medical evaluation, or more with a health certification, and up to $10,000 for a child. A new legal-services benefit will give employees access to counsel on issues such as estate planning, adoption, and civil lawsuits for $16.50 per month, with no usage limits or out-of-pocket costs.
The open enrollment period runs from October 25 through November 8; the University will host several benefits fairs throughout October to assist employees with options.