Why?
"Harvard wary of health care costs" by Beth Healy and Robert Weisman |
Globe Staff, November 02, 2012
Harvard University’s top financial officials are sounding an alarm
about the rising cost of medical benefits for its employees, saying
costs are growing at a rate “unsupportable” relative to revenues.
In Harvard’s annual report, being released Friday, officials said
that while they want to keep offering generous benefits, the school
“cannot simply continue with the status quo.” It is the first time the
nation’s richest university has addressed employee health care so
directly.
Benefit costs at Harvard hit $476 million for the year that ended
June 30, double what they were a decade ago, with health care accounting
for the largest portion.
The university’s medical care obligation for retired faculty and
staff is causing even greater fears. At $901.5 million, it’s nearly
equal to the pension obligation for retirees — $910 million.
Rising health care expenses are a critical issue for many schools,
said Richard Doherty, president of the Association of Independent
Colleges and Universities in Massachusetts. “Colleges and universities
are taking a good, hard look at everything they can do to manage costs
so they can manage tuitions,” Doherty said. “Health care is certainly
one of those things that have been driving up the cost of education.”
In the report, Harvard acknowledges it now faces the same daunting
challenge that businesses and state governments have grappled with for
years. Last year, in its first health plan overhaul in several years,
the university passed higher co-pays and deductibles on to employees. It
also asked them to absorb more prescription drug costs.
Universities and colleges, particularly elite institutions, have long
had a culture of rich benefits, said Jon Kingsdale, a managing partner
at the Wakely Consulting Group in Boston, which specializes in health
care.
“The combination of having a very entitled workforce and being
somewhat insulated from cost pressures means that universities have been
slow in general, compared to manufacturing, finance, and even retail
employers, in sharing costs with employees,” he said.
Underlying the health care concerns is Harvard’s weakened financial
position since the nation’s financial crisis. After many prosperous
years, Harvard can no longer rely on banking hefty profits from the
school’s $30.7 billion endowment. Like many institutions, its
investments tumbled sharply in 2009 — by 27 percent — but even last
year, with stock markets showing healthy gains, Harvard’s endowment was
essentially flat.
Just like your pension statements, Americans. Interesting. Not even Harvard is benefitting from the fraudulent stock market.
UPDATE: New VP will scrutinize Harvard’s investments
And I can't believe they can't pay the health bills when they are SITTING on nearly $31 BILLION! I know it's no Apple, but....
“The financial crisis has acted like a tidal wave that, as it
receded, exposed certain vulnerabilities with a new clarity,’’ Harvard
financial chief Daniel S. Shore and treasurer James F. Rothenberg said
in the report.
Last year, the endowment delivered $1.4 billion to help run the
university, which still operated at a $4.5 million deficit. The total
budget is $4 billion, about half of which goes to salaries and benefits.
The university has so far set aside about one-third of
the amount needed to pay retiree health benefits, but the plan is
officially “unfunded,” meaning the funds have not been permanently
earmarked.
WTF?
The Globe last year examined rising retiree health care costs at a number of schools, including Harvard.
Harvard has taken steps to clamp down on its large debt load, which
expanded during the financial crisis when the school borrowed to raise
cash. Outstanding debt fell to $6 billion as of June 30, after peaking
at $6.3 billion last year. As a result, interest payments slid by 4
percent to $287 million. At the same time, Harvard isn’t getting much
added revenue from tuition because it has expanded financial aid.
Oh, so Harvard -- Harvard, of all places -- is caught in the debt trap, too?
Who set that all up anyway?
The new financial pressures are bringing expenses of every kind under
scrutiny at the university.
Harvard has been restructuring, hiring more
carefully, and keeping raises modest, while still trying to attract top
talent.
Only the bankers are seeing big bucks these days.
The school has revived a long-stalled Allston expansion plan, even as
it takes other cost-saving measures, such as managing space “for
maximum efficiency,” reorganizing libraries, and consolidating computer
services.
Isn't that where they are building the new basketball arena?
Btw, how much did all the spying cost?
The report said the university is “committed to offering fair and
competitive compensation to all its employees,” but that it must balance
that “with our need to pursue the university’s broader objectives.”
Just wondering if employees and staff are sick of hearing the same old excu$e$ from AmeriKa's mo$t-re$pected in$titutions?
--more--"
Also see: Harvard, large union at odds over health care
Time for dinner.
