It’s a delicious irony; academics at one of the nation’s top universities, averaging a cool $200k income, some of whom championed parts of health reform and PPACA, are whining about deductibles of $250, $20 copays for office visits, and out-of-pocket maximums of $1500 for individuals.
Oh, the tragedy!
Yes, part of the cost increase may be due to ACA requirements for dependent and preventive care coverage, the elimination of lifetime maximums, and a higher tax burden due to the Cadillac tax.
But these Cambridgians are merely experiencing higher insurance costs and more out-of-pocket costs – what the rest of us have dealt with for years.
What’s missing from the mass media’s reportage is any real understanding of two underlying concerns, concerns that are real, important, and significant.
First, requiring cost sharing does cause some reduction in necessary care. There’s no question about that. As reported in the NYT article; “Consumer cost-sharing is a blunt instrument,” Professor Rosenthal [of the Harvard School of Public Health] said. “It will save money, but we have strong evidence that when faced with high out-of-pocket costs, consumers make choices that do not appear to be in their best interests in terms of health.”
This is a valid concern, and one not getting near enough attention. Deductibles and copays have far outlived their utility; they discourage seeking needed and unnecessary care. And, once the member blows thru their out-of-pocket maximum, they don’t do anything to reduce unnecessary utilization. As a relatively few people incur most health care costs, we need a far smarter approach than these crude cost dis-incentives.
Second, costs are high in large part because employees’ health care choices are very broad. Again, the NYT: “Harvard employees want access to everything,” said Dr. Barbara J. McNeil, the head of the health care policy department at Harvard Medical School and a member of the benefits committee. “They don’t want to be restricted in what institutions they can get care from.”
And therein lies the rub. Smaller, narrow expert networks deliver better outcomes for lower cost.
What does this mean for you?
I’d expect much better approaches will emerge soon. Especially now that the real world has invaded the Halls of Academe.
I applaud you for underscoring the point about cost sharing and narrow networks, which the New York Times article glossed over in overemphasing unsubstantiated connections between the changes at Harvard and the ACA. But it’s important to understand that this was as much about staff, who make a fraction of what professors do, as it was about faculty. Faculty spoke up because they could; non-union staff had no venue for doing so. Also, that $200,000 average salary includes the law school and Kennedy School of Government. Your average Harvard professor teaching undergraduates is not making that! But even if he or she were, at least these professors haven’t forgotten about middle-income Americans like the lower-paid staff, untenured faculty, and postdoctoral fellows who are vital to making places like Harvard function. A $4500 out of pocket maximum for a family (not all Harvard employees only have individual concerns so the $1500 individual max is misleading) is a huge burden on someone making only $45,000 a year. Keep up the probing reporting! We need it.
Thanks as always for a thoughtful post.
I too have complained for years on the use of deductibles and coinsurance as cost control.
Coinsurance for most hospital procedures is just cruelty.
Damned few patients are going to search out a cheaper hospital so that their 20% coinsurance tab will be less.
Leaving aside the many patients who arrive on a stretcher, and leaving aside the majority who find it very important to go wherever their doctor says to go, the range of ‘choice’ is very limited.
As you say, there are other ways to cut costs. My way would be pretty crude also, however. I would go after the 10 or 20 largest claims in a large group, and refuse to pay bloated charges for hospital care and drugs.
(we need legislation of course, so that patients are not balanced billed when the insurer pays less.)
But look at the numbers. In a group of 10,000, I can use deductibles so that everyone uses $500 less on primary care.
Big f-ing deal.
The technique above might save $5 million, although some patients will be hospitalized because they skipped primary care to save money.
Instead, I would find the 20 largest claims for heart transplants, premature infants, etc.
I would then cut the reimbursements on those claims from $500,000 to $250,000.
That would save $5 million also!!
Bob Hertz, The Health Care Crusade
Bob – good to hear from you as always. I wholeheartedly agree – focusing on the first dollar is ineffective at best and counterproductive at worst.
Instead, focus on the members, providers, and conditions that really cost money and hurt people.
Perhaps, someday…