Reform for Student Health Plans

The U.S. government says it will include student insurance plans in the health care overhaul, in some cases requiring colleges to strengthen their coverage for students.
February 10, 2011

Student health plans provided through colleges and universities would be subject to most of the same provisions that President Obama’s health care reform laid on all other insurers, under a proposed regulation announced by the U.S. Department of Health and Human Services on Wednesday.

The announcement follows months of lobbying and back-and-forth bickering between college associations and advocates for students. The former urged the government to let the plans continue in their current form, and stood accused of trying to dodge the health care law. The latter complained that the student health plans provided inadequate coverage to students and are cash cows for the colleges, and urged the government to subject them to equal federal regulation under the Affordable Care Act.

But, as the regulation is still a proposal, don’t expect either sector to slow down anytime soon. In a conference call with reporters Wednesday, representatives of the American Council on Education and the health care advocacy group Young Invincibles both said they plan to continue addressing the issue in one way or another.

While the proposed rule is clearly a victory for the student advocacy groups, its reception for colleges is somewhat less clear.

For most institutions, the provision won’t make a huge difference in how plans are structured and carried out, said Steven M. Bloom, director of federal relations at ACE, because those student plans are already up to par with the new federal standards.

But other colleges with less satisfactory plans might have a hard time complying with the regulations. “It really depends on what the plan looks like now,” Bloom said in an interview. “For some institutions it won’t require big changes at all because they already have very, very comprehensive plans…. [Other plans] that have much less don’t really provide robust, comprehensive care, and there will be changes with those plans. They will have to come in line with the requirements.”

Bloom said on the press call that ACE and the American College Health Association will offer formal input, as HHS is requesting comments on the provisions.

Among the key provisions of the health care law that will affect insurance plans for students are bans on exclusions based on pre-existing conditions; on lifetime coverage limits, meaning insurance companies cannot cap the amount they spend on health benefits in the student plans; and on companies dropping coverage when enrollees get sick.

“It’s a big win for students,” said Bryan A. Liang, executive director of the Institute of Health Law Studies at the California Western School of Law. Going forward, he said, “they’re going to have at least a little bit of security.”

Liang’s only disappointment is the delay between now and when the regulations would go into effect. If approved, that will be Jan. 1 of next year, but the provisions won't apply to plans negotiated before that date, which would include all plans active during the 2011-12 academic year. What’s more, the law specifies that some of the provisions, such as the pre-existing conditions exclusion, will be phased in. Some won’t go into effect until 2014.

Student advocacy groups such as Campus Progress have been working with Young Invincibles to ensure that the ACA provisions would apply to student plans, and they issued news releases praising the regulation as well. In an interview, Aaron Smith, co-founder and executive director of Young Invincibles, called the proposal a “big victory for students,” but he made clear that he and others will be right back on Capitol Hill if the provisions are altered.

One of the most important provisions, Smith said, will require plans to raise their medical-loss ratio to the 80 to 85 percent rate required under the ACA. That means that for every dollar a student spends on insurance, 80 cents will go toward medical care, rather than to administrative costs. But Bloom worries that insurance companies will use the provisions as a pretext for raising premiums on colleges.

According to the Government Accountability Office, about 2,000 colleges offer student health plans. A GAO survey referenced in the proposed HHS regulation found that 96 percent of those plans established a maximum benefit during the 2007-8 academic year, most of which (68 percent) were lifetime limits. It is unclear how many students are enrolled in such plans; estimates range from 1.1 million to 4.5 million. According to the GAO, though, 80 percent of college students were insured in 2006 -- most through their parents’ plans -- so the number of enrollees in student plans is comparatively small.

Last year, Liang and others criticized ACE for misrepresenting the extent to which the ACA would apply to student plans. They said ACE and other college associations were trying to exempt the plans from the federal regulations by calling them “limited duration plans” rather than “individual” plans -- a distinction laid to rest by the proposed regulations, which classify the plans as individual. But Bloom maintained Tuesday that ACE simply sought clarification from the agency on whether three specific provisions of the health care law would apply to the student plans. “We were concerned that if they were classified as an individual market, our plans would be subject to these reforms," he said.

Two of the provisions in question, it turns out, will not apply to the student plans: Guaranteed Issue, which would allow anyone to purchase a student plan; and Guaranteed Renewability, which would ensure that the plan can be bought from year to year. The third provision concerns pricing and rating, and while Bloom believes that HHS was receptive to ACE’s insistence that the plans be priced based on the demographic traits of the population -- essentially, that they be cheaper because students are generally younger, healthier and less likely than most people to use their insurance -- the regulation does not specifically address this issue, he said.

“We assumed that ACA would apply to [student plans] in some fashion, we just didn’t know exactly how,” Bloom said. “We were acting away and advocating away for plans that were very much consistent with the principles laid out by the American College Health Association for what a good plan should look like, and I think you’re likely to see that these regulations will lead to reform of student health plans and lead to better coverage in those situations where right now the plans are not very good.”


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