Post Retiree Health Care Crisis in Universities

Today’s Managing Health Care Costs Indicator is $812 million

Today’s Boston Globe reports that universities are struggling with their obligations to their retirees, just like local and state government.   Historically, pension obligations were far larger than retiree health obligation, but that has recently changed.   In fact, this year they are about equal for Harvard University.

Think about this for a moment.  Post-retiree health obligation is merely to pay for what is not covered by Medicare for retirees over 65, yet the cost is still higher than the cost of pensions!  Increases in the cost of pension and retiree health care ($35 million) exceeded the salary costs shed by Harvard as it began its painful austerity program last year ($31 million).

Harvard University’s current post-retiree health obligation is $812 million. 

This is further evidence that we really must lower the inflation rate of health care, or we will continue to suffer cuts in other areas vital to our future.

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Health Care Crowd Out

Today’s Managing Health Care Costs Indicator is

$30 billion

Peter Orszag, most recently the head of Obama's Office of Management and Budget, has a column in today's New York Times  demonstrating that increasing costs of health care have a substantial impact on other social priorities.

He reports research that shows that in 1985 states spent 50% more on higher education than on Medicaid, and the ratio has now flipped. During this time period, 43 states have cut their support for higher education, and salaries for academics at public universities have slide well behind those at private universities.   Public universities represented 40% of the top ranked colleges a quarter century ago.  Now, they represent 12%.

If state colleges and universities were being supported at the rate they were supported in 1985, higher education would be getting $30 billion more in state aid a year ($2000 per student.)

Orszag concludes that controlling health care costs might be the best way to improve post-secondary education in America.

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