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Harvard, large union at odds over health care

Members of Harvard University’s largest union reacted angrily Friday to assertions by the school in its annual report that health care costs for employees are growing at unsustainable rates.

The Harvard Union of Clerical and Technical Workers, which represents about 4,600 skilled office, laboratory, and library staffers, is negotiating medical care contributions and wage increases with university officials. Its contract expired June 30. “We’re in a difficult contract negotiation,’’ said Bill Jaeger, director of the union. “We’ve been struggling with health care issues for the past three years or so with some intensity.”

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Harvard, in its annual report released Friday, said, “Our employee benefit expense, of which health care is the largest component, has been increasing at an unsupportable rate relative to actual and expected growth in the university’s revenue.”

Employee benefits costs grew 3 percent, or $15 million, to $476 million in the fiscal year ended June 30, 2012. Looming health obligations for retirees are estimated at $901.5 million.

But Jaeger said health care expenses are not escalating out of control at Harvard, in part because the employees have cooperated in shouldering more of the costs.

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“The university should be careful not to mislead members of the Harvard community and other interested people because actually, in last couple of years, in terms of benefits cost increases, it seems like our community’s doing a great job at controlling costs,’’ he said.

Harvard declined to comment for this story.

The university’s 16,500 employees have essentially the same health care benefits, from tenured professors to cleaning staff. But the university has instituted a sliding scale for individual employee contributions, based on the size of their paychecks. The highest-compensated workers pay 25 percent of their premiums, while those earning the least pay 15 percent.

Jaeger said the union remains concerned that lower-compensated workers are paying too large a share of their insurance premiums. For instance, an employee making $40,000 a year pays nearly $3,000 a year for a family plan, while someone earning nearly three times as much — $110,000 — contributes $4,896.

Harvard rejected the union’s proposal to reduce the lowest-paid workers’ contribution by a couple percentage points, while raising it for those at the top end of the pay scale. The union said its suggestion was in keeping with models at Yale and Brown universities.

The school tweaked some of its health plans last year, raising copays to $20 from $15 for office visits and increasing out-of-pocket payments for prescription drugs. It also increased deductibles for out-of-network services, and asked retirees to pay higher deductibles and co-insurance on their benefits.

Because of ongoing contract negotiations, the new plans haven’t taken effect for the union’s members.

Harvard said it wants to continue to offer generous benefits, in keeping with the culture of academia and elite institutions. But specialists in the field say schools are being challenged to both control costs and offer benefits rich enough to attract the best talent.

Larry Ladd, director of the national higher education practice at Grant Thornton, a Boston accounting firm, said the price of health care benefits is a pressing issue on many campuses. “Because the health care costs are going up faster than any other cost that I’m aware of in a university budget, universities — needless to say — will focus on that,” he said.

Beth Healy can be reached at
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