Who’s Getting Over on Students?
Many of us who have ever been enrolled in a student health plan (SHP) and all of us in the health policy arena knew that student plans are lousy. Last week, the Division of Health Care Finance and Policy released its Student Health Program Baseline Report (ppt), the first of its kind to take a thorough look at the student health insurance programs in the state. This report confirms our hunch – we just didn’t know it would be this bad.
The results are eye-opening to say the least. The average premium paid by the 95,000 students enrolled in SHPs was $1,216 but there is a very wide range in the price of premiums; one plan’s annual premium was over $2,500.
Benefits can be very skimpy. On average, around 3 out of every 200 students exceeded the benefits offered by the plan. The report found that "students enrolled in SHPs offering lower levels of coverage may experience significant out-of-pocket expenses due to coverage gaps."
The fourth largest student carrier in the state, with over 4000 students, are plans offered by MEGA Life & Health Insurance Company, a company that was thrown out of the individual insurance market in MA by the Attorney General for numerous violations of state law.
The report also shows that a number of national, for-profit health insurance firms are gouging the students of Massachusetts with very high premiums for very little benefits. While the major non-profit private insurers based in Massachusetts do just fine spending about 10% on administrative costs, and earning a 2% profit margin, some students are being forced into plans where 25% of the premium goes to administration, and another 20% to profit.
The average for all plans offered by insurers was just 67% of premiums going to medical costs. The average profit margin was 10%, compared to 2% for private employer plans.
Many schools begin negotiating contracts with insurers at the beginning of the calendar year for the upcoming fall and we’re already into the month of November. The state has a narrow window of opportunity to ensure that students get a fair shake by the start of the next school year by implementing new regulations.
Too little time to make progress on this you say? Well, we’ve got a few ideas:
- The state has authority now to mandate that schools only purchase plans that direct 85% of their cost to medical benefits. This conforms with the national insurance standards proposed in the House and Senate health reform bills.
- The state can organize a consortium of all state colleges and universities to purchase insurance as a group for lower rates. They can also allow private institutions the option of participating in this group. There’s power in numbers.
- They could open up existing Connector plans to students – that’s a no brainer. The Connector already has the infrastructure to collect group premiums from employers and allow the workers a choice of plans
The Globe covered the report, and the student groups that are organizing around this issue.
We’re excited to have this data at last. HCFA will continue monitor the progress of this issue. We’re not alone in thinking it’s time for insurers to stop using students to fatten their pockets. It's time for some quick action.