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    Harvard HUDS Insurance Analysis

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    Micah Johnson
    This document analyzes and compares the health insurance plan proposed by Harvard for its employees to plans available on the Massachusetts health insurance exchange. It finds that Harvard's plan has higher premiums and out-of-pocket costs than many exchange plans, and would be considered unaffordable according to government standards for many low-income employees. Exchange plans could save employees thousands of dollars per year in costs. While Harvard's plan includes protections for low-income workers, these protections still require upfront payment of costs and reimbursement later, posing financial risks.

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    Harvard HUDS Insurance Analysis

    Uploaded by

    Micah Johnson
    3K views5 pages
    This document analyzes and compares the health insurance plan proposed by Harvard for its employees to plans available on the Massachusetts health insurance exchange. It finds that Harvard's plan has higher premiums and out-of-pocket costs than many exchange plans, and would be considered unaffordable according to government standards for many low-income employees. Exchange plans could save employees thousands of dollars per year in costs. While Harvard's plan includes protections for low-income workers, these protections still require upfront payment of costs and reimbursement later, posing financial risks.

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    Harvard HUDS Insurance Analysis

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    This document analyzes and compares the health insurance plan proposed by Harvard for its employees to plans available on the Massachusetts health insurance exchange. It finds that Harvard's plan has higher premiums and out-of-pocket costs than many exchange plans, and would be considered unaffordable according to government standards for many low-income employees. Exchange plans could save employees thousands of dollars per year in costs. While Harvard's plan includes protections for low-income workers, these protections still require upfront payment of costs and reimbursement later, posing financial risks.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    3K views5 pages

    Harvard HUDS Insurance Analysis

    Uploaded by

    Micah Johnson
    This document analyzes and compares the health insurance plan proposed by Harvard for its employees to plans available on the Massachusetts health insurance exchange. It finds that Harvard's plan has higher premiums and out-of-pocket costs than many exchange plans, and would be considered unaffordable according to government standards for many low-income employees. Exchange plans could save employees thousands of dollars per year in costs. While Harvard's plan includes protections for low-income workers, these protections still require upfront payment of costs and reimbursement later, posing financial risks.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 5

    Analysis of Health Insurance

    Proposal for HUDS/Local 26


    Prepared by Rahul Nayak, Sanjay Kishore, Darshali Vyas,
    and Micah Johnson
    Harvard Medical School Class of 2019
    September 2016

    Summary:

    Harvards proposed health plan is more expensive for Harvard employees than what would be
    available to them on the Massachusetts health care exchange if Harvard did not offer any health
    plan.

    Even with proposed protections for low-income workers (co-pay reimbursements) the plan is
    more expensive than plans available through the exchange and may threaten the financial
    security of many families of Harvard employees.
    Background:

    Harvards proposed plan would cost workers making less than $55,000 a year $233/month for
    family coverage ($77 contribution/week for 36 weeks/year).

    Additionally, proposed changes would increase co-pays for nearly all health services.

    The proposed plan has some protections to limit co-pays for low-income workers through an
    after-the-fact reimbursement program. However, these protections require workers to pay the
    full co-pay, save receipts, and actively file for reimbursement.
    Harvards Health Plan Is Unaffordable According to Government Standards:

    The state of Massachusetts ensures that workers who do not have employer-sponsored
    insurance have access to affordable health insurance. The premiums, co-pays, and out-ofpocket costs families pay is based on income and family size.

    For nearly all dining workers, Harvards proposed health plan is considered unaffordable under
    state government guidelines.

    Many workers would be eligible for health plans that have lower premiums, cheaper co-pays,
    and smaller out-of-pocket maximums (see Appendix for more details). This is even after taking
    into account Harvards co-pay reimbursement plan.

    If Harvard offered comparably affordable health insurance, the average worker could save
    thousands of dollars every year (see Appendix for more details).
    Bottom Line:

    For nearly all dining workers, Harvards proposed health plan is considered unaffordable under
    state government guidelines.

    Many dining workers would receive more affordable health insurance under plans on the
    Massachusetts exchange. If Harvard offered comparably affordable health insurance, most
    workers could save thousands of dollars every year.

    More Detailed Analysis

    Harvards Health Plan Is Unaffordable Compared to Health Exchange Plans

    If Harvard did not offer an insurance plan, many workers would qualify for subsidized health
    insurance under the Massachusetts health insurance exchange. The subsidies are based on
    families relationship to the federal poverty level, which is a function of income and household
    size.

    o
    o

    Lets imagine that you make $30,000/year and you have a family of 3.
    Your income and family size would put you at 148% of the federal poverty level.
    You would be eligible for Massachusetts Connector Plan 2A, which has no monthly premium
    and lower out-of-pocket costs than Harvards plan.
    Massachusetts Connector Plan 2A

    Harvard Plan

    Premiums

    $0

    $233/month

    Co-Pays

    Mostly cheaper

    Mostly more expensive

    Prescription Drug Costs

    Similar

    Similar

    Out-of-Pocket Max

    $1500

    $2000

    If your family was completely healthy the entire year, and never had to use healthcare, here is
    what your minimum health care costs would look like:
    Best-Case Scenario

    Mass. Connector Plan 2A

    Harvard Plan

    Premiums (annual)

    $0

    $2800

    Out-of-Pocket Spending

    $0

    $0

    Total Spending (% of Income)

    $0 (0%)

    $2800 (9.4%)

    If your family had a severe illness, medical emergency, etc. in a year, here is what your
    maximum health care costs would look like:
    Worst-Case Scenario

    Mass. Connector Plan 2A

    Harvard Plan

    Premiums (annual)

    $0

    $2800

    Out-of-Pocket Spending

    $1500

    $2000

    Total Spending (% of Income)

    $1500 (5%)

    $4800 (16%)

    From the best case to the worst case, Harvards plan costs this family ~$3000 (~10% of income)
    more every year
    Premiums

    Under the Affordable Care Act (Obamacare), individuals who do not receive insurance from their
    employer can apply for coverage on an exchange.

    On the exchange, they receive subsidies if premiums are more than a certain percentage of
    their household income. In other words, people should not have to pay more than a certain
    percentage of their income towards health insurance.

    The guidelines for the maximum amount that can be spent on monthly premiums is even more
    generous in Massachusetts:1
    Household Income % of federal poverty level

    Premium (Monthly)

    <133%

    $0

    133-150%

    $0

    150-200%

    $43

    200-250%

    $82

    250-300%

    $123

    Summary: Harvards health plan has more expensive premiums than what workers can find on
    the Massachusetts exchange.

    Co-Pays and Out-of-Pocket Maximums


    Along with increased co-pays, Harvard is proposing a reimbursement program for low-income
    workers that will limit out-of-pocket costs. With this program, the out-of-pocket maximum
    (maximum amount of money you will spend on medical care besides premiums) will be capped
    at $1025 for individual coverage, or $2000 for family coverage. However, workers will have to
    get reimbursed for spending over this amount.

    However, many other plans on Massachusetts exchange have even lower out-of-pocket
    maximums (Type 2A/2B on table below).

    To qualify for the Harvard reimbursement program, workers would need to fully pay all co-pays
    throughout the year and save their receipts, potentially jeopardizing their financial security.
    Summary: Harvard plans also have more expensive out-of-pocket costs than plans on the
    Massachusetts exchange, and the design threatens the financial stability of low-income
    workers.

    1 The state subsidizes insurance plans such that there is at least one health insurance plan that has the premiums listed in the
    table. https://betterhealthconnector.com/wp-content/uploads/ConnectorCare-Placemat-090816.pdf. Other insurance plans may have
    more extensive networks, but charge higher premiums. However, all of these plans still have smaller premiums than Harvards
    proposed plan for most workers. For example, the Neighborhood Health Plan charges $150 under the 2A plan and is a broad
    network plan like Harvards proposed plan (see https://betterhealthconnector.com/wp-content/uploads/ConnectorCare-Placemat090816.pdf).

    Health Insurance Comparison


    MassHealth, Type 2A/2B, and Type 3A/3B are health insurance plans subsidized by the
    government.2

    Many workers would qualify for these plans based on their income and family size.
    Plan

    Mass
    Health

    Income - % of
    federal poverty
    level

    Type
    2A

    Type
    2B

    Type
    3A

    Type
    3B

    Harvard

    Harvard with
    Co-pay
    Protection

    <138% 138%150%

    150%200%

    200%250%

    250%300%

    All
    income

    <$75,000

    Monthly
    Premiums

    $0

    $0

    $43

    $82

    $123

    $2333

    $233

    Out-of-Pocket
    Maximum:

    $0

    $750/
    1500

    $750/
    1500

    $1500/
    3000

    $1500/
    3000

    $2,000/
    6000

    $1025/
    2000

    PCP:

    $0

    $10

    $10

    $15

    $15

    $20

    $20

    Specialists:

    $0

    $18

    $18

    $22

    $22

    $20

    $20

    ER:

    $0

    $50

    $50

    $100

    $100

    $100

    $100

    Outpatient:

    $0

    $50

    $50

    $125

    $125

    $100

    $100

    Inpatient:

    $0

    $50

    $50

    $250

    $250

    $100

    $100

    Imaging:

    $0

    $30

    $30

    $60

    $60

    $50

    $50

    Lab/X-ray:

    $0

    $0

    $0

    $0

    $0

    $0

    $0

    Generics:

    $1

    $10

    $10

    $12.50

    $12.50

    $7

    $7

    Preferred:

    $3.65

    $20

    $20

    $25

    $25

    $20

    $20

    Non-Preferred:

    $3.65

    $40

    $40

    $50

    $50

    $45

    $45

    Specialty:

    $3.65

    $40

    $40

    $50

    $50

    2 https://betterhealthconnector.com/wp-content/uploads/ConnectorCare-Placemat-090816.pdf
    3 This premium is for family plan for workers making under $55,000. For workers
    making over $55,000, the premiums are higher.

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