Harvard and “Free” Health Care
A New York Times article earlier this week on changes to Harvard University’s health plan has drawn attention from all sides of the political spectrum. While New York magazine’s Jonathan Chait asserts that the developments at Harvard show the growth of conservative principles, one could also argue they demonstrate the inability of a liberal approach to health plan design to control costs.
The changes at Harvard, which have prompted pushback from many faculty, include the introduction of a $250 deductible and other cost-sharing—i.e., coinsurance and co-payments—for doctor visits, hospitalizations, and certain other procedures. The Times article, quoting the university’s enrollment guide, blames Obamacare as one of the culprits for the changes:
The university said it “must respond to the national trend of rising health care costs, including some driven by health care reform,” in the form of the Affordable Care Act. The guide said that Harvard faced “added costs” because of provisions in the health care law that extend coverage for children up to age 26, offer free preventive services like mammograms and colonoscopies and, starting in 2018, add a tax on high-cost insurance, known as the Cadillac tax.
Some on the right have seized on the irony of the Harvard faculty—many of whom, the Times notes, supported the health care law, and worked to aid its passage—complaining about its ramifications on their own coverage. But the larger irony is that the supposed benefits of the law do not come without costs—that the “free preventive services” discussed in the article and often touted by Obama administration officials really aren’t free. Those costs just get shifted elsewhere, as in the new cost-sharing just announced.
Many on the left firmly believe in health insurance as prepaid health care—that policies should cover all procedures free, or nearly free, of charge. But decades of rising costs have forced many businesses to alter their health plans, adding cost-sharing provisions and in many cases empowering patients to serve as better health care consumers. In many cases these reforms, such as Health Savings Accounts (HSAs), have worked to reduce health costs; a 2012 Health Affairs study found that expanded HSA usage could lower health spending by as much as 9.1%. It’s these principles to which Harvard has turned—at least in part because the mandates in Obamacare left them few remaining options.
Still, Harvard’s new $250 deductible is quite modest compared with that of many other employers. A recent Kaiser Family Foundation report found the average deductible last year exceeded $1,200 for single coverage.
Mr. Chait argues that the Harvard story shows that Obamacare promotes conservative principles when it comes to patient cost-sharing. But he avoids mentioning the obvious: Harvard included such “reforms” only when it had no other choice—because the liberal premise of “free” health care proved too costly to sustain.
This post was originally published at the Wall Street Journal Think Tank blog.