Student health plans threatened

 

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Tough to see the future for college health plans

NPR reports that the federal health care overhaul might leave colleges unable to offer their traditional student health plans, which cost students less than regular plans but often provide limited benefits.

The new requirements, they say, could drive up premiums and price them out of the reach of the students they’re designed for.

About 7 percent of students buy their own policies or purchase one of the school-based plans, according to a federal report. At some institutions, such as the University of Minnesota, medical insurance is mandatory.

Dr. Ed Ehlinger, director and chief health officer of the University of Minnesota’s Boynton Health Service, said the problem is that the overhaul never really addressed student health plans. And that has caused confusion and concerns over a number of issues, including:

  • Annual caps. The feds are abolishing them in 2014. Starting this year, insurers must offer at least $750,000 in coverage per year. That’s no problem for plans like the University’s, which has a cap of $5 million. But others, Ehlinger said, have caps of $100,000 or less for a lifetime, or have caps on how much it will pay out on any one medical “event.” That leaves students with not much of a safety net, critics say.
  • Spending regulations.The new rule requires insurers to spend at least 80 percent of their revenue on medical care, so as to curb excessive spending on profits or administration. Ehlinger said the University spends 80-85 percent of revenue on care.
  • Classification. Group plans designed to serve large but select pools of people — such as a company’s employees — generally offer better rates than those designed for individuals. The overhaul does address business group plans, but doesn’t say whether college plans fall under the “group plan” classification. If student plans end up being classified as individual plans, college officials say, they’ll lose that better rate. The loss of group-plan status means they also might have to be offered to the public at large, which would drive up premiums even more. That’s because insurers would then have to insure not just the limited student group — generally a healthy bunch with few medical costs — but also the public, which generally consumes more health care because it contains sicker people. So insurers would price the premiums accordingly for taking on that higher risk.

The schools are trying to get a waiver. But some in the business, such as Ehlinger, say a number of rules would do society a service by driving out a number of poor-quality plans. Too many of them bar pre-existing conditions, have low caps or won’t treat certain illnesses.

“Some plans out there should not be in existance,” he said.

As the NPR story quotes:

The school based policies “financially benefit the school and their insurance company partners over the student … are poor in coverage and may violate consumer protection law and public policy.”

Many colleges need clarity soon, because they’re negotiating long-term contracts with insurers now even though the rules won’t kick in until 2014. The University does its own insurance, but still needs clarity on a number of issues.

Despite the unknowns, Ehling said, “we’ll adjust and make do. I think we’ll be OK.”

The University is part of the Lookout Mountain Group, whose members agree with some of the education council’s requests, including its concern that colleges not be required to offer coverage to non-students. But the group disagrees with the council’s position that student health plans are exempt from some rules that go into effect this year, including the restriction on annual limits.