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New Rules for Health Plans

March 19, 2012

WASHINGTON -- Filling in a key missing piece in the battle over religious institutions and insurance coverage for birth control, the Obama administration announced late Friday that most colleges’ student health plans will have to include contraceptive coverage at no cost.

The rules will apply to religious and secular colleges alike, although religious institutions have an additional year to comply with the new regulations. The administration’s final rule on student health plans, which will be published this week in the Federal Register, left one loophole: colleges that offer self-insured student health plans, rather than purchasing plans from an insurer to offer to students, will not be required to cover contraception.

The battle over whether religious colleges should cover birth control at no cost for their employees has been fierce. A medical panel recommended contraceptive coverage as a key part of preventive care for women of child-bearing age, but many religious employers argue that providing contraception, including the morning-after pill and sterilization, goes against their beliefs. A compromise by the Obama administration -- that insurers, not employers, would pay for and offer the birth control coverage -- did little to diminish the controversy.

The rules announced Friday extend the same compromise to religious colleges’ student health plans: the insurer, not the college, will pay for the coverage, but it must be included in all policies. Still, the requirement that students’ birth control be covered is likely to provoke an outcry among colleges that prohibit or discourage premarital sex on moral grounds.

"It appears that the administration is attempting to address many of the issues that we have raised in our communications with them by accommodating student health care plans and self-insured institutions," Paul Corts, president of the Council for Christian Colleges and Universities, said in an e-mail to Inside Higher Ed. "However, we retain our belief that our institutions have a constitutional right to a religious exemption and not just an administrative accommodation." The organization had pushed for an exemption that would extend to colleges rather than just houses of worship, which would mean they would not have to offer birth control coverage at all.

Both Roman Catholic and evangelical colleges had sued in recent months over the new policy, arguing in part that they can’t preach against birth control or premarital sex at required religious services and then offer students contraception free of charge.

The exception for self-insured health plans, under which colleges pool students’ premiums to pay for health care rather than purchasing an insurance policy, applies to secular and religious institutions alike and exists because of a “hole in the statute,” Department of Health and Human Services officials said in a conference call with reporters on Friday. About 200,000 students are believed to rely on self-insured plans -- a small fraction of the total number of students covered on all college health plans, which HHS has estimated to be between 1 and 3 million.

Many more employers self-insure for their employees’ health insurance, and those plans will not be exempt from the birth control requirement, the officials said. The third-party administrator whom employers frequently hire to administer self-insured plans will probably be responsible for the cost of birth control for employees of religious institutions.

Other Changes to Student Plans

The final rule on student health plans dealt with more than birth control. It also imposed new regulations first proposed more than a year ago. College health plans have been criticized for low lifetime benefit caps, high profit margins for colleges, and exclusions that leave students with no coverage for illnesses that are expensive but not uncommon.

Under the new rules, lifetime and annual benefit maximums will be phased out. Benefit caps can be no lower than $100,000 in the 2012-13 school year and $500,000 in the 2013-14 school year, and after that will be eliminated completely. The medical loss ratio -- the percentage of premiums that must be spent on health care programs and quality improvement -- must be at least 70 percent in 2013 and 80 percent in 2014.

Colleges warned that the delay in issuing the final rule -- a proposed rule was published in February 2011 -- was causing problems for institutions, in part because the cost of health plans affects how much financial aid students receive. In a March 2 letter to HHS Secretary Kathleen Sebelius, seven higher education associations led by the American Council on Education urged the administration to release the final rule immediately.

“In the absence of final regulations, it is difficult for schools to complete negotiations with their issuers,” the groups wrote.

The American College Health Association is pleased that the rules have finally been released, the group’s president, Anita Barkin, wrote in an e-mail to Inside Higher Ed. The group is still studying the regulations, including how they differ from the proposed rule put forward last year. Some of the differences pertain to the requirements for the medical loss ratio and benefit caps.

“We are pleased that the final regulations, although somewhat different in terms from the draft regulations, continue to provide a path to compliance for schools that currently offer lower annual dollar limits than those required under [the Affordable Care Act],” Barkin wrote.

Young Invincibles, an advocacy group that fought for the passage of the health care law, praised the release of the regulations, including the contraception provision, and called the rules “a major victory for students and their families.”

The Association of Catholic Colleges and Universities did not respond to a request for comment late Friday, and the Association of Jesuit Colleges and Universities declined to comment on the new regulations.

 

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