The New ‘Austerity Imperative’ for Universities

Coming soon: The next outrage in your university health-care plan. And it’s all part of “business as usual.”

Here at Pennsylvania State University, the new bad news is steep hikes in health-coverage rates for graduate students, combined with cuts in benefits. The real “usual” is saving money at the expense of those who can least afford it.

Last year Penn State made national news (and not in a good way) for its Take Care of Your Health plan, a “wellness” program that would have required all faculty and staff members and graduate students to upload their medical information—including such intimate matters as plans to get pregnant in the near future—or face a penalty surcharge of $100 per month. The outcry was so loud that the administration backed off, suspended the surcharge, formed a health-care task force, and promised to heed critics’ concerns about the confidentiality—and the effectiveness, or lack thereof—of wellness programs. The task force’s report has now been released, and I’m happy to see that it is sharply critical not only of the rollout but also of the plan itself.

And now it’s the graduate students’ turn.

To be sure, Penn State is not precisely the culprit here. Aetna is—for raising prices on premiums by 30 percent; raising prices on deductibles from $75 to $250 for individuals and from $225 to $500 for a family; lowering out-of-network coverage from 100 percent to 90 percent; and adding an out-of-pocket maximum of $1,350 for individuals, $2,700 for families. The university has tried to soften the blow by increasing graduate-student stipends 3 percent. But stipends are mostly below $20,000, so even though the raise helps, the unprecedented out-of-pocket provisions mean that every graduate student is only one significant illness away from coughing up $2,700. No one making under $20,000 can absorb that kind of hit.

The developments over the past year have been very good organizing devices, I’ll say that much. Twice in the past, I tried to found an AAUP chapter on the campus, and both times I met with responses ranging from indifference (this won’t affect me, la la la la la) to learned helplessness (it’s pointless trying to restore shared governance, so why even try) to outright abjection (if I join an organization devoted to academic freedom, my colleagues and superiors will shun me). But it turns out that when you mess with people’s health care, they realize why it’s a good idea to get together and act collectively. I didn’t have anything to do with it: I woke up one morning last August to find that lo, we had an AAUP chapter, and its officers were taking the lead on health care and benefits, working with the Faculty Senate on stopping “Take Care of Your Health.” As a faculty senator and AAUP member, I was happy to help. For now, it appears that the pushback did some good.

And, of course, these local events here are just one version of much larger phenomena, one of which is the price-gouging and profiteering that defines American health care. Just for the record: I sympathize with administrators who are trying to find some way to control their institutions’ health-care costs. After all, that is why crazy, hemp-wearing, patchouli-scented lefties like me wanted single-payer in the first place.

So the problem before us is what we might call the Austerity Imperative: Since rising costs and declining benefits are the new normal, how best to share the burdens fairly? It is a coercive question. It amounts to asking how much each of us should be hurt.

In response to graduate students’ protests, Penn State released some “benchmarking” numbers that show similar plans elsewhere. Compared with our peers, all of whom are feeling the same pressures, our health-care costs—and our plans for dealing with them—are not out of line. I have since heard of another major university whose benefits committee has proposed a “Total Rewards Program” that includes a “benefits rate cap.” Translated, I believe the former means “we are now going to play your salaries off against your benefits package,” and the latter means “higher deductibles and co-pays.”

I am of two minds about benchmarking, even though the very word makes some of my colleagues flinch. On the one hand, it can be a good thing, especially if your college is isolated and/or insular; it provides a way of finding out whether your local practices are out of line with industry standards. On the other hand, it can serve as a way for institutionalizing worst practices, whenever industry employment standards take a nosedive—as they have, not only in academe but also in other sectors of the American economy. Just as important, it can serve as a way of keeping executive pay in the stratosphere, when everyone is benchmarking against everyone else’s bloated salaries.

And sometimes, the dispassionate number-crunching can serve as a cover for policies that deliberately produce the most pain at the lowest reaches of the pay scale. For example: In response to the outrage about the wellness program last year, Highmark, our plan’s administrator, appeared before the Faculty Senate to reassure everyone that the proposed changes were right, just, and inevitable (and their website was secure). In the course of the presentation, one representative explained that the $100 surcharge was proposed because company research showed that number would generate a compliance rate of 70 to 80 percent.

And who would be the noncompliant 20-30 percent? It was obvious that everyone expected the highest-paid employees to opt out, forgoing the privilege of sharing their intimate medical information with some online outfit—and possibly with third-party vendors. The plan was designed to snare professors on the short end of the salary scale—and all graduate students and staff members. As for the Penn State administrators who approved it, one surmises that most of them would not find a $100-a-a-month penalty terribly burdensome. But apparently nobody considered the possibility of pegging the surcharge to a percentage of salary.

I, myself, would go further. If the Austerity Imperative demands that we all pay more for less, and the demand is truly beyond the scope of any individual campus (as is clearly the case with health care), then justice demands that the people who benefit most from our system of income inequality—the people for whom increased premiums, deductibles, and co-pays will matter little if at all (I would place myself in the “little” category)—step up and agree to subsidize the people who literally cannot afford a couple of hundred dollars here and a couple of thousand dollars there.

No one, anywhere on any campus, who makes less than $50,000—let alone graduate students on stipends—should be required to shoulder increased systemwide health-care costs. It is true that those costs have skyrocketed; but salaries for administrators and coaches have skyrocketed as well. Those salaries are not going to be reduced—they, too, are part of the new (benchmarked) normal. But perhaps some measure of sanity can be restored to the finances of higher education if the most well-remunerated people on campus agree to absorb the rising costs of health care on behalf of their institutions’ most vulnerable and precarious employees.

Michael Bérubé is a professor of literature and director of the Institute for the Arts and Humanities at Pennsylvania State University.

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