How Behavioral Economics Could Have Prevented The Harvard Meltdown Over Healthcare Costs

The Harvard faculty recently raised a stink because their benefits now require them to pay out-of-pocket for some of their medical care. Physician appointments will no longer be free, but will cost $20. And Harvard faculty will be expected to pay 10% of the cost of many medical services, up to a maximum of $1500 per year.
Harvard is not alone in asking its employees to pay out-of-pocket for a larger portion of their medical care. If anything, it is asking less from its faculty than most employers expect of their employees. It is common for many people to receive high deductible health insurance plans from their employers, asking them to pay $2,000 or even $3,000 in medical expenses before their health insurance steps in. Copayments for services such as doctor visits frequently cost $50 or more.
So why is the Harvard faculty so upset? Because for too long, they have received generous health insurance without being aware of the true cost of this benefit, and because Harvard, in making modest and justifiable changes to the economics of employee healthcare benefits, ignored the behavioral economic forces underlying how people respond to such changes. (To read the rest of the article and leave comments, please visit Forbes.)

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