In a recent “Views” piece, representatives of the American Council on Education argued that the higher education community is not attempting to “dodge the health care law” by seeking “clarification” about the application of Affordable Care Act (ACA) mandates to school-sponsored health insurance plans (SHIPs). The authors, Terry Hartle and Steven Bloom, said that ACE is only seeking guidance about ACA mandates for its members.
However, upon analysis, we believe that the authors’ assertions are incorrect. Under no federal regulatory scheme have school-sponsored health plans been deemed to be limited duration plans, and ACE, is, in fact, seeking a waiver from ACA mandates. Let us explain.
Under the federal code, “Short-term, limited-duration insurance means health insurance coverage provided pursuant to a contract with an issuer that has an expiration date specified in the contract … that is less than 12 months after the original effective date of the contract.”
In contrast, SHIP contracts signed between schools and insurers are typically one-year coverage contracts, not limited duration plans as defined by law. For example:
- United Healthcare states in some marketing messages to students and contractual language on policies that SHIP is a “one-year non-renewable term policy.”
- An Aetna Student Health SHIP vendor policy states that “Coverage for all insured students enrolled for the Fall Semester, will become effective at 12:01 a.m. on August 15, 2010, and will terminate at 12:01 a.m. on August 15, 2011.”
In addition, a ”clarification” of ACA provisions will not waive the applicable state provisions, further complicating the patchwork of uneven regulation and undermining student and parental protection as consumers in these states. This conflict provides an important basis to ensure that ACA’s mandates are followed, namely to create a unified regulatory system with an appropriate floor for beneficiary health care services that harmonizes conflicting legal definitions.
Historically, SHIPs have been treated by federal law as individual health insurance plans. As noted by the Department of Health and Human Services, “health coverage might be provided through an association or other group, such as groups of college students … it is still considered to be ‘individual’ health insurance ….”
Consistent with this policy, SHIPs are considered individual health plans under ACA, since they are not group plans. SHIPs are therefore subject to ACA individual plan mandates, which include free preventive care, medical loss ratio requirements of 80 percent, prohibition of discrimination based on preexisting conditions, the ban on lifetime/annual benefit caps, and other protections.
Through the letter to HHS, ACE seeks to avoid these mandates for their constituents, yet ACE claims that the higher ed community is not requesting a waiver. However, it wishes SHIPs to be considered “limited duration plan[s]” that “can continue to provide coverage under ACA without altering their design.” Quite plainly, ACE is requesting a waiver, both of SHIPs’ actual status as individual plans as well as ACA patient protection requirements.
These SHIPs should not be granted a waiver of any sort. In fact, SHIPs are exactly the types of low-quality plans ACA was designed to address, and across the country they are plagued with access problems, poor quality performance levels, and inappropriately low spending on health care services.
Let’s look closely at just one of ACE’s arguments, in which they indicate that SHIPs “typically do not impose pre-existing condition exclusions.” In fact, most SHIPs do have pre-existing exclusion elements that do not allow for coverage of pre-existing conditions until after a waiting period, usually three or six months after coverage is purchased. For example:
- A $2,152-a-year Aetna SHIP notes that only “persons who have remained continuously insured under this Policy or other Policies will be covered for any pre-existing condition.” The policy then goes on to list 45 exclusions.
- A Blue Cross/Blue Shield SHIP costs $1,598 and yet has only a $200,000 maximum benefit. "[T]here is a 12-Month preexisting condition exclusion period” and “the Plan will allow up to $500 per lifetime for Covered Medical Expenses related to all preexisting conditions combined.”
Perhaps the State University of New York at Stony Brook provides the most telling indication of pre-existing exclusions in SHIPs: it markets its SHIP by noting others’ limits: “Unlike most student health insurance plans, [our] SHIP does cover pre-existing conditions for our students.”
While ACE indicates that it is not opposed to efforts to enhance the quality of student health plans, its request to allow SHIPs to continue “without altering their design” only ensures continued low-level SHIP performance. Repeated analyses, including examinations by the New York attorney general (and now Governor) Andrew Cuomo and by the Government Accountability Office, have shown these are generally poor-quality plans that represent conflicts of interest between the school and student, and are not “responsive to the unique needs of the student population.”
Finally, granting a waiver for SHIPs will raise costs for a majority of students and parents. Since most students have their own insurance and pay for coverage through their parents, providing SHIP waivers will result in many students again having to purchase the redundant SHIP plans for services already paid for, increasing student and parental debt. College tuitions are rising 20-120% faster than consumer inflation; students and parents should not be subject to additional, avoidable, and redundant costs.
Instead, SHIPs should be subject to ACA standards and reach high performance levels as other schools plans have done. For example, some schools have been highly successful in revamping their SHIP programs, including institutions as diverse as Boston University with its extensive service levels and Brigham Young University with its 93 percent medical loss ratio.
Since ACA is a consumer protection law, SHIPs should not be permitted to avoid its requirements. Rather, schools should renew their fiduciary duty to students and parents by having SHIPs fulfill ACA requirements, attaining service and performance levels such as that of BU and BYU, and working to ensure that student health is designed to keep the most students at their books for the most amount of time. Only through this process will students be protected as the ACA intended.
Bryan A. Liang is Shapiro Distinguished Professor of Law and executive director of the Institute of Health Law Studies at California Western School of Law, and professor of anesthesiology and director of the San Diego Center for Patient Safety at the University of California at San Diego School of Medicine. Tim Mackey is a senior research associate at the California Western health law institute and a doctoral student.