A letter to Larry Bacow

Three suggestions as you take over as Harvard president

DEAR LARRY,

As you begin your tenure as president of Harvard University next week, I wish you the very best. We appreciated all you did when you were the president of Tufts University; you really helped to make Tufts a better place.

Having read your May interview with outgoing President Drew Faust in the Harvard Gazette, I appreciate that you intend to spend a good deal of time during this next year listening and thinking about where to put your focused energies. While my guess is that most of the advice you receive will be about how best to maintain and grow the greatness of Harvard in the research and teaching realm, I urge you to focus some of your contemplative time on what Harvard can do to improve the well-being of those Massachusetts residents who are often challenged to make it in American society.

Given some of the issues that could likely intersect with your role and thought processes as Harvard’s president, I suggest three robust areas for your consideration for some dedicated attention: the need to increase state support for public higher education in Massachusetts; the affordability of health care services for those with commercial insurance; and the need for Harvard to invest a portion of its endowment funds in efforts to improve the life and health of our area’s poor and lower middle class residents.

Greater support for public higher education in Massachusetts

At Tufts, you more than doubled the university’s investment in financial aid, tried to reduce loan burdens for students, and introduced a loan reduction program for graduates entering careers in public service and the nonprofit sector. Motivated I’m sure by your recognition that affordable access to public higher education for students from lower income households is often an important gateway to a stable financial future, during your Tufts presidency you testified before the Legislature about the need for state to invest in its public colleges and universities. This issue seems even more pressing today, with researchers and advocates noting that current state higher education funding in Massachusetts is about 40 percent below what we spent in 2001, after adjusting for inflation and the large increase in enrollment.

With a ballot question on the millionaire tax now ruled unconstitutional, I think you may want to consider using the bully pulpit of your office to draw attention to this public higher education funding issue. I urge you to reach out other state leaders to advocate for greater public higher education funding and push for higher taxes to pay for it.

Affordability of health care services for those residents with commercial insurance

When it comes to health care affordability for people in our state, I hope you can do a lot more than simply point to the body of research contributions that faculty, staff, and students from the various Harvard schools make in exploring health care cost issues confronting us in Massachusetts.

I suggest you convene the leadership of your various Harvard-affiliated teaching hospitals and health care systems, and let them know that you have strong expectations about their working towards greater affordability in their provision of health care services. One of the primary challenges is the high commercial prices some of the Harvard-affiliated institutions charge for their care—in particular, Massachusetts General, Brigham and Women’s, and Boston Children’s hospitals, and Dana-Farber Cancer Institute.

One reason for their high commercial prices is that they use private insurance reimbursement to cover not only patient care costs, but unfunded research costs. This is unfair. These institutions end up taking money away from less-wealthy community hospitals who often serve lower income people and need more resources to care for such groups. The health insurance scheme is also inherently regressive, with lower income people paying a disproportionate share of commercial premiums and out of pocket costs.

Earlier this month, these hospitals and their lobbyists successfully amended the House health care bill to specifically re-categorize research expenditures as a “warranted” factor for commercial price variation, rather than an “unwarranted” one, as was designated both by the Special Commission on Provider Price Variation, as well as the House leadership who drafted the initial bill. What better evidence of the reality of this challenge to overall commercial spending and affordability.

The goal is not to necessarily reduce overall research efforts at these hospitals; rather, it is to fund research either through grant, contract, or philanthropic mechanisms and avoid using commercial insurance premiums and out-of-pocket spending to pay for some of it.

As someone who understands the value of research and innovation, yet has a history of wanting to advance a more socially just society, you are the perfect advocate to deliver this message to hospital leaders.

Social determinant investments with Harvard’s endowment

Finally, I urge you to spend some time thinking about how Harvard can better use some of its vast financial resources to advance equity and achieve a more socially just society here in Massachusetts.  I am thinking beyond the level of a commitment such as the ‘required’ payments-in-lieu-of-taxes that Harvard makes in Cambridge and Boston, as these relatively small payments just reimburse a portion of some of the basic costs of municipal services that are provided to help support the operational needs of the university.

Unlike hospitals that legally qualify for tax exemptions by meeting the definition of a charitable organization by providing community benefits, nonprofit colleges and universities have had a much easier time gaining tax-exempt status. They derive their tax-exempt status for simply being an educational organization organized and operated on a nonprofit basis, and by honoring a few fiduciary constraints.

Your predecessors began to evolve more of a community benefits concept starting a little over a decade ago as the university developed a plan for its expansion in Allston. Spurred on by the city’s expectations and requirements for community benefits for developers of larger real estate projects, Harvard has made commitments tied to creating a neighborhood hub that offers education and training, workforce development, health and wellness activities, neighborhood fund innovative ideas grants, and arts and culture programming to Allston and Brighton residents.

Part of the required commitment to the city was Harvard promising about $11 million towards affordable housing in its 2013 agreement. In its home city of Cambridge, the university has also helped by creating a revolving capital fund of about $20 million to be used for affordable housing loans. However, this still seems to be a small commitment in relation to the incredible affordable housing needs in the metro area.

This is where I would hope you could think a bit more expansively and creatively about the idea of committing a portion of Harvard’s endowment—currently at around $37 to $38 billion—towards more socially responsible investments in things like affordable housing.

Just as many of us on the community advocacy side of health care are asking our nonprofit health care systems and insurers to take some of their savings and invest it in ways that not only yield a positive rate of return for the institution, but also advance some social determinant of health or equity. With the size of Harvard’s endowment, 3 percent for this sort of social-determinant-related investing could free up more than a billion dollars that could be invested on a revolving basis.

I doubt that devoting such a small proportion of endowment assets to something that may be a slightly longer term investment would affect the average 5 percent payout that is taken each year to support university operations. But don’t underestimate how a pot of money around that size–even as it earns a rate of return for Harvard–could be productively invested in something like affordable or workforce housing and contribute to addressing some of the inequities that exist in our metro area that flow from the housing affordability crisis.

You noted in the May interview, that you often tell new university presidents that the challenge is not identifying the right things to do, but executing on those ideas.

But here, I do think that as you start you new position as Harvard’s President, taking the time to think about what the University should be doing to advance its community service mission by your decision to take on some issues which are directly tied to a more socially just and equitable society here in metro Boston, is a worthy investment of your reflection time.

Sincerely,

Meet the Author

Paul A. Hattis

Associate professor, Tufts University Medical School
Paul Hattis

Dr. Paul A. Hattis is an associate professor of public health and community medicine at Tufts University School of Medicine. He is a former member of the Health Policy Commission and a current member of the commission’s advisory council.