Another view of changes to Harvard’s health insurance plan

Contrasting it with coverage typically available elsewhere, Adrianna summarized Harvard’s plan — controversial among its employees — to increase cost sharing for the health insurance coverage it offers. The bottom line is that it could be read as a means of getting out ahead of the “Cadillac” tax, to be imposed beginning in 2018, as the Affordable Care Act dictates.*

This rhetorically connects Harvard’s move to the ACA, tempting some to suggest that the controversy is a bit of an embarrassment since Harvard faculty were among the advisers on health reform.

What’s interesting, however, is not how much the ACA has shaped Harvard’s evolving plan design, but how little it does so. Though the ACA’s Cadillac tax is viewed (perhaps incorrectly) by many as doing the heavy lifting at Harvard, the needle on cost sharing is not moving very far toward what others elsewhere typically pay.

More interestingly, in my view, is that Harvard is not implementing a wellness program, which is also encouraged by the ACA. This, I think, is wise, since such programs are usually of little value and can attract a fair amount of controversy themselves.

Nor is Harvard signing up with an ACO-like insurance arrangement, such as that implemented by Blue Cross Blue Shield of Massachusetts and other private payers. If any new health care financing arrangement is most closely associated with the ACA, it’s ACOs.

Tellingly, some Harvard employees admitted to welcoming exchanging less cost sharing for tighter networks, another plan design feature now closely linked with insurance available through ACA exchanges.

If you go down the list of programs and payment structures most closely associated with the ACA, Harvard is prominently adopting only one: higher cost sharing. This could reflect the fact that it’s the one, private plan innovation with the longest, proven track record of reducing spending, going back at least to the RAND health insurance experiment. It’s also the approach most closely associated with conservative reform principles, by the way.

That Harvard is pursuing only a small subset of reform ideas built into the ACA is almost guaranteed. For cost control, the law is a kitchen sink approach, with more ideas in it than can be implemented by one organization or that are likely to work. That’s because we don’t really know what will work, long term. And, of those ideas, only one could potentially hit Harvard’s bottom line (or that of its employees, really), and that’s the Cadillac tax.

For all that, Harvard could have pursued some of the many, more liberal-leaning and experimental, paths toward cost control that the ACA recognizes. Maybe the source of the controversy on Harvard’s campus can be attributed not to the fact that the new health plans closely resemble the designs of Obamacare, but that they don’t resemble them enough.

* It could also be read as just a way to bring Harvard slightly closer to typical employer-plan norms, having little to do with the Cadillac tax.


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