A Future for Student Health Plans?

WASHINGTON – In the six months since President Obama signed his health insurance reform bill into law, student health advocates have comprised one of countless lobbies jockeying to get the administration to listen to their concerns about the law and offer up clarifications and fixes.

Since last fall, when separate drafts of a reform bill made their way through the U.S. Senate and House of Representatives, the American Council on Education and the American College Health Association have taken the lead in pushing for assurance from Congress or the Obama administration that student health insurance plans are structurally able to exist and remain affordable under the new law – essentially, maintaining the status quo for the plans even as the nation’s insurance market changes dramatically in the coming years. The new law gives students a chance to be covered by their parents' plans through age 26 and, beginning in 2014, to buy coverage through state exchanges, creating new options for students.

“I think there’s still going to be a need for college plans in a post-health care reform world,” said James C. Turner, immediate past president of the ACHA and director of student health at the University of Virginia. “There are so many complications – international students, married students with dependents, students going to school across the country from their parents’ networks – that student plans will continue to be an important part of the landscape.”

But in the absence of certainty on what the regulatory future of student plans will be, Turner’s vision – and conveyed by leadership of ACE and ACHA -- of a future where the plans are still needed in the same form as they exist today is facing dissent. Critics charge that student plans have become cash cows for the institutions that offer them, where the focus is more on profit margins than it is on providing a high quality service to students.

In a study commissioned by the Senate Health, Education, Labor and Pensions Committee in 2008, the Government Accountability Office found that about 80 percent of college students aged 18 to 23 were insured in 2006. Of the overall student population in that age range, 7 percent had private health plans like student plans, while 6 percent had public plans and two-thirds were on their parents’ employer-sponsored plans. In all, about 600,000 students who skewed wealthier than average were on private plans – a small number in a nation of 300 million, meaning the plans have not gotten much attention in the ongoing health insurance debate.

Neither Congress nor the Obama administration has taken concrete steps to ensure that student plans will survive all the changes coming to the insurance market in the next few years, even as higher education associations seek out attention.

Before the bill passed, ACE, ACHA and other college groups met with Congressional staffers to try to get a promise that student plans would not be held to higher standards – ensuring their ability to continue to exist – written into the legislative text. Since the bill passed without that language, the groups’ attention has shifted to the executive branch. In early June, several associations met with Nancy-Ann DeParle, director of the White House Office of Health Reform, to express their concerns.

At the time, the groups were confident that the administration was amenable to their interests. “It was just like a miracle, the Holy Spirit dropping from heaven,” Jim Turner, the then-president of the ACHA, told association members a few days after the meeting. “It looks like we have an advocate,” Turner said of DeParle. “She said, ‘Tell me what you want written into the regulations and we’ll make it happen.’ ”

Another person at the meeting, Steven Bloom, ACE’s assistant director of government and public affairs, was a bit more guarded in his take. “It was very clear that they did not intend to hurt student plans and were very willing to work with us to resolve the issues,” he said in June.

But that enthusiasm may have flagged a bit over the summer, and after no official response came from the Obama administration, Molly Corbett Broad, ACE’s president, in mid-August wrote to DeParle and Kathleen Sebelius, secretary of health and human services. She asked for “urgently needed regulatory confirmation” to ensure that the law would not “make it impossible for colleges and universities to continue to offer student health plans.”

The two key areas of concern were whether student plans would be considered to meet the “minimum essential coverage” standard under the individual mandate, and whether the plans would be classified as individual or group plans in the insurance market. If the plans didn't satisfy the minimum coverage standard, plans would need to improve their offerings (and become more expensive) to qualify, or students who opted for them would have to pay a tax required of anyone who declines the individual mandate. Plans classified as "individual" are more expensive than group plans because the risk is not pooled. The letter was co-signed by ACHA, along with a dozen other higher education groups including the American Association of Community Colleges, the National Association of College and University Business Officers and the Association of American Universities.

ACE has yet to receive an official response from either the White House or the Department of Health and Human Services, other than a letter expressing their willingness to continue discussions on the association’s concerns. “It’s still not clear they know much about this very small subset of the health insurance arena,” Bloom said. “It seems like they want to talk to us, ask some questions about student health plans, but they want to gather background information before they reach out to us again.”

In early September, a Department of Health and Human Services spokeswoman told Inside Higher Ed that some details on the administration’s stance on student plans were forthcoming. Last week, she said she had no new information to share.

Bryan A. Liang, executive director of the Institute of Health Law Studies at California Western School of Law and a professor of anesthesiology at the University of California at San Diego School of Medicine, said he sees the administration’s inaction as a sign that officials may be considering tougher standards for student plans. “Democrats don’t want to be seen doing something that would seem to deny students insurance or make it more expensive,” he said. “So instead they’ve done nothing on this.”

Liang said he thinks administration officials may have come to realize that student plans are "low-quality cash cows that take advantage of students" by offering few benefits or being required on top of parental plans or Medicaid, and are now hesitant to act, especially in advance of midterm elections that are, in part, a referendum on the health reform law. "The profit margins are huge, so it's no wonder that some colleges are pushing hard to keep them."

Though ACE, ACHA and most of the other major higher education associations have mounted a united campaign on student health insurance, there has been audible dissent.

Paula Swinford, director of health promotion and disease prevention at the University of Southern California and a former president of the ACHA, in late August wrote to the well-trafficked Student Health Services listserv to voice her opposition to the continued existence of student plans – period.

“Why should a 19 year old college student have access to a health care insurance product that my 19 year old non-college student nephew can’t access? I cannot, in the best interest of students nationwide and society at large, support the continuation of the practice of creating specific health care insurance for individuals enrolled at a particular institution of higher education.”

After years of advocating for better student plans, Swinford has come to the conclusion that student plans would never universally be as good as they ought to be. “Looking at all the thousands of institutions of higher education and asking the basic question, is it really the role of higher education to do health care, I’ve decided it isn’t,” she said in an interview.

Her argument against student plans is rooted in three issues. First, as a health educator, Swinford said she thinks introducing traditional-age students to the same kinds of insurance policies they’ll have to deal with post-graduation is important. Second, is “social justice – I find it very difficult to lobby for something for one 19-year-old and not another.”

Finally, she said, “colleges can’t do quality stuff across the board.” Since the creation of student plans decades ago, there have been subpar offerings like those identified earlier this year in an investigation by New York Attorney General Andrew Cuomo (a Democrat who is the frontrunner in the state’s gubernatorial race), and while “advocates will say we can weed out the bad, we’ve had at least 20 years to do that, maybe longer, and we haven’t done it so far and I really don’t think we’re going to do it any better now.”

Swinford concedes that she’s in the minority in the college health world, most of which still advocates for the continued existence of student plans, while still differentiating themselves from the stance advocated by ACE and ACHA in their interactions with the White House and the Department of Health and Human Services.

A week after the associations wrote their August letter, Young Invincibles, a pro-health care reform group representing young adults, submitted to the Obama administration a scathing critique of the position taken by ACE and ACHA, which was to essentially exempt student plans from reform. “Young adults, a segment of the population whose health care is too often left to the mercy of low-quality insurance plans, desperately need the protections offered by reform,” the group wrote. “We appreciate the importance of an insurance option for students, particularly in the years before the exchanges offer competitive individual plans. However, the desire to maintain that option should not leave millions of students without the most basic protections” provided by the new law.

Lookout Mountain Group, an independent nonpartisan group pushing for high-quality student insurance, which has at some points in the 18 months since its founding been in close alliance with ACHA, wrote its own letter voicing moderate dissent from the higher ed associations. “A central reason for LMG’s founding was to address the issue of the significant number of poor quality [student health insurance plans],” wrote Jim Mitchell, the group’s spokesman, who is director of student health services at Montana State University. “It would not be in the best interests of America’s college students” for HHS to approve the “inadequate” plans that ACE and ACHA want to keep alive.

Aaron Smith, executive director of Young Invincibles, said he saw his group as pushing for “a middle ground between preserving student plans and improving their benefits without making them unaffordable.” Though the higher ed associations have pushed for the plans to be classified as “short-term limited duration,” and thus subject to little oversight, “we don’t think that makes any sense – students are on these plans for four years, maybe more, and should get good coverage during those years.”

But Young Invincibles doesn’t see student plans as the key to insuring most students. “Generally you’re going to have better value going on your parents’ plan,” Smith said. “And once the exchanges start working, they’re probably going to offer better options too, but student health insurance plans should still be around for those who need them.”

Sandy Praeger, a Republican who is Kansas’s insurance commissioner, isn’t sure student plans will be able to survive much past 2014. The plans “are in limbo,” she said. “I don’t think there’s going to be a much of a need for them once the market expands. If I were the CEO [of a student insurer], I’d start looking for some alternatives to compete in a different way or figure out some other businesses to go into.”

Student health plans haven’t been subject to regulations on benefits, loss ratios and other factors, but new rules from the Department of Health and Human Services are likely to put the policies under greater regulatory constraint. “If they have to comply with all the rules that apply to group plans, they’ll be more costly,” Praeger says. “And if student health plans are considered individual plans that have to comply with all the rules that apply to those plans, that will probably make them more expensive.”

Mitchell, of Lookout Mountain Group, said he supports “preserving good quality plans as a good option to college students” and sees a future for the plans so long as they offer “a lower cost alternative to what students would have access to in the exchanges.”