Students Win Big on Health Plans
Classroom groans, agonizing waiver forms, and the palpable resentment that boils over while glaring at the health plan fact sheet – these are the frustrations of students every fall semester when signing up for health insurance. But now there is a reason to cheer.
On February 10th, the federal Department of Health and Human Services (HHS) announced that consumer protections for individual plans in the Affordable Care Act (ACA) will be extended to student health plans (see details and analysis on the Health Affairs blog). This represents a major win for students and their families to receive the quality care and benefits coverage they deserve.
Under the newly released HHS regulations, beginning January 1, 2012, students will have access to free preventive care, lifetime benefit caps will be removed with a phase-out of annual benefit caps, and medical loss ratio of 80% will be required of health plans. In addition, insurers will no longer be able to deny students of a health plan due to pre-existing conditions beginning in 2014.
These provisions will bring a sigh of relief for many students across the country. With gouging premiums and profit margins of some plans exceeding 500% the industry average, student health plans frequently fail to deliver affordable care to many tightly budgeted students. To further darken the picture, some health plans have reported medical loss ratios as low as 35 percent. In other words, only $35 of every $100 spent on a premium was used on medical expenses. Minus administrative costs, the remaining amount represents insurer profit margins.
Massachusetts should be proud of taking the early initiative to improve the affordability and benefits coverage for student health plans. Since 2005, DHCFP has collected extensive data on key indicators, such as student premiums and medical loss ratios, among all colleges and universities across the state. Among all higher education schools in Massachusetts, the medical loss ratio has risen to 72 percent as of 2009 – a small gap to overcome relative to other health plans outside of the state. In 2009, it started a group purchasing initiative, starting off with community colleges, which had the worst record in buying plans with good value.
The 2008-2009 report was just issued, which details improvements made and includes a chart showing the dramatic improvements in plan benefits and value for community colleges in 2010.
The improvements to the community college student plans are dramatic:
- Eliminating the $50,000 annual benefit maximum. Students will no longer have a benefit maximum, which ensures that students who experience serious medical conditions will have coverage for those events.
- Eliminating the 6-month pre-existing condition limitation. Students with existing medical conditions will benefit from immediate plan coverage.
- Eliminating the $1,500 cap on all outpatient services for each illness or injury. Students will no longer have to pay out-of-pocket for expenses over $1,500, significantly reducing students’total medical expenses.
Eliminating the $150 cap on ambulance coverage.
- Lowering co-payments for most office visits. Community college students will experience lower co-payments for most office visits ($10 compared to $20).
- Improving access to preventive care and disease management. Students will also have access to preventive care and an array of medical and disease management tools. These improvements will allow students to proactively manage their health and wellness and develop healthy habits for life.
Similar improvements are being made to state university plans, including eliminating a $3000 maximum on prescription drug benefits.
Through the collaborative efforts of numerous groups – such as Student Health Organizing Coalition, Young Invincibles, the Connector, DHCFP, and Higher Ed representatives – Massachusetts has led the effort to offer students with affordable health plans with expanded benefits. Under the new ACA regulations, HCFA is thrilled to know that student health plans across the country will receive the same consumer protections as all Americans.