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Colleges try to sneak out of health coverage for students

For many folks it’s hard not be cynical about the state of health

care and, in particular, health insurance in this country. While

the government rightfully attempts to protect and empower

consumers, health insurance companies and colleges are trying

to squeeze maximum revenue out of students by offering

limited benefit plans at relatively high rates.

This is not meant to demonize health insurance companies or

universities. Clearly, some folks could benefit from a limited

benefit plan based on their age, health status, risk profile,

family history, and ability to pay. However recent pleas by

colleges to waive out of some caps and new rules under the

Patient Care and Affordable Care Act (ACA) should fall on deaf ears.

Some colleges along with the American Council on Education (who collectively account for 4.5

million students) assert in a letter, dated Aug. 12 and sent to Secretary of Health Kathleen

Sebelius, that they will not be able to offer health plans that meet the “essential minimum

coverage” required of all individuals in the individual mandate (set to go into effect in 2014). The

mandate imposes an annual penalty on individuals who do not have qualifying plans meeting this

coverage standard (See ACA §1501).

What these colleges fail to mention in the letter is the provision in ACA allowing students to stay on

their parents’ health insurance coverage until they are 26 years of age. This provision will cover

the far majority of students who typically purchase these limited benefit plans in the first place.

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Of course, one particular omission in the ACA, which I have written about previously on my blog,

is the lack of attention to health insurance portability. We have an employer-based system that

places the onus on the individual employee to choose an insurance plan essentially based on what

their employer can afford. Worse yet, if that employer leaves they are left with three

unsatisfactory options: (1) purchase COBRA (presuming it is even affordable, which is a bold

Colleg es a r e tr y in g to g et ou t of

com ply in g w ith th e h ea lth ca r e

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unsatisfactory options: (1) purchase COBRA (presuming it is even affordable, which is a bold

presumption considering research shows that premiums can cost up to 84 percent of one’s

unemployment income); (2) wait without insurance coverage until a new job is found and a new

insurance plan can start; or (3) enroll in Medicaid and have access to far less benefits, a smaller

network of health care providers, and for some, the social stigma of having government subsidized

health insurance.

While ACA didn’t appropriately tackle portability, by allowing coverage for children until the age of

26 it solved a major hurdle parents have dealt with for years, namely: how to keep their children

insured past the age of 18 (although some states did previously mandate children could stay on

until age 24). So why would colleges ask Sebelius if they could get a special waiver to continue

selling these limited benefit plans? Because they are highly profitable.

So much so in fact the attorney general of New York, Andrew M.

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Cuomo, commisioned a report after a year-and-a-half

investigation which found the following: Annual premiums for

student plans run as high as $2,500 and some do not cover pre-

existing conditions or prescription drugs. Caps on coverage can

be as low as $25,000 annually and $700 per illness.

Cuomo went on to note that “[c]ollege-sponsored, private

health plans cover about one million students and generate $1

billion in annual revenue for insurers. The plans can be costly

for students and extremely limited in their coverage.”

Unfortunately these plans are not in the best interest of

students and to allow colleges to waive out of an important

provision that would require a "minimum" standard of care would be outrageous.

In this cat and mouse game of regulation changes and companies finding loopholes in which to

exploit them, I’m reminded of a quote in the movie Runaway Jury -- it’s time the regulators

became a little more cat and a lot less mouse.

John Wilson blogs at Policy Diary on health and education policy. Follow him on Twitter and

become a fan on Facebook.

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