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Surveying the Battlefield: College Health Insurance and Health Care Reform

Published:  July 7, 2010

Next year, all young adults between the ages of 19 and 26 will have the option of remaining on their parents’ health insurance. This is one of the most popular elements of the new health care reform law, and it is expected to remove a sizeable barrier to health care access for    a group that too often lacks coverage -- but will it be this simple?

For college students, it might not be. Depending on how new regulations are written, accessing health care on campus could remain costly and restrictive for many students.

As Higher Ed Watch has reported, colleges tend to strongly encourage (and sometimes mandate) students to buy school-sponsored student health insurance/benefit plans (SHIBPS) even if the students or their families have alternate health insurance that offers more-comprehensive coverage. At many schools, students are allowed to opt out but are charged much higher fees when they try to use their insurance at their campus health centers.

Colleges and insurance companies, such as United Health Care and Aetna, want to keep things as they are – as they have lucrative deals that could be threatened if students decide to stay en masse on their parents’ health plans. Parental plans tend to offer more generous coverage with fewer annual lifetime caps on benefits than those offered by schools.

Leading the fight to preserve as much of the status quo as possible is the American College Health Association, a trade association of college healthcare professionals that includes over 900 colleges and universities as institutional members. At a recent meeting with the White House about student health insurance, ACHA officials emphasized that staying on their parent’s health insurance can “create certain issues” for students, such as “limited benefits when seeking out of network care from the college community specialists and hospitals.” [These “limited benefits,” are, in fact, limits that colleges and university health centers place on students who do not purchase SHIBP plans, such as the hefty fees that are commonly charged at campus health centers.]

Also waging the battle is a second association formed by several college health professionals, called the Lookout Mountain Group, which often takes a harder line than the ACHA, or at least is less diplomatic and more upfront about its views. For example, in a recent position paper, LMG  spokesman (and former ACHA President) Jim Mitchell says outright that, “Colleges and universities should have the option of requiring students to participate in their SHIBPs regardless of parental coverage that might otherwise be available through age 26.”

Mitchell, who is the director of the student health service at Montana State University, also argues that colleges should continue to be allowed to require students on Medicaid to participate in their college health plans (as opposed to having college health centers simply accept Medicaid coverage). Those unfamiliar with the college health care system may be shocked to hear that excluding Medicaid coverage is even on the table in this debate --but there are colleges and universities that currently require students on Medicaid to purchase separate college-sponsored health insurance plans or face higher charges. Currently, Medicaid coverage expires for most young adults at the age of 19, so this is only an issue for a very small group of college students. The new health-care law, however, will in the future allow any student who comes from a family with an income 133 percent below the poverty line to stay on Medicaid. As a result, if the Lookout Mountain Group gets its way, students with the greatest financial need could face additional fees and expenses if they attend a college that pushes SHIBP insurance over Medicaid.

According to a recent report in Inside Higher Ed, the meeting last month between ACHA officials and the White House addressed another crucial issue: How will college-sponsored plans themselves change in the new health care system? Depending on what niche SHIBP’s find in the new health care system, they may have to change dramatically --charging less for coverage, doling out far more in benefits to students, and reaping less profits from what was previously considered an extremely lucrative sector of the health insurance business. A look at the amount of money distributed in benefits to enrollees per dollar paid in premiums to the insurer tells this story well. Currently, SHIBP’s distribute as little as 30 cents in benefits for each dollar in premiums collected. In the future, it is likely that SHIBP’s will have to distribute a minimum of 80 cents (possibly, much more) on the dollar in benefits to students, and send reimbursement checks to enrollees if they fail to do so.

Both the New York Attorney General and the Government Accountability Office have investigated college-sponsored insurance, and concluded that health care plans are often overpaying for coverage that can be dangerously insufficient. The Patient Protection Affordable Care Act is designed to lower the cost and increase benefits of health insurance for all citizens— and though college-sponsored plans are likely to change, PPACA does not specify to what extent.

Will SHIBP’s survive in the forthcoming health care system? Will students on their parent’s health care plans or even Medicaid still rack up costly fees at campus health centers? Will colleges and universities still be allowed to mandate double-coverage, even for students on their parent’s health insurance?

Higher Ed Watch will be looking to see how these questions are answered -- and whether the answers keep students’ best interests in mind.

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