State To Review Limited Coverage, Caps in Student Health Plans

State regulations that require college students to have health insurance but allow insurers to substantially limit coverage - potentially exposing seriously ill students and their families to enormous medical bills - will be overhauled, according to a top state official.

The Division of Health Care Finance and Policy is conducting a "soup to nuts" review because of mounting concerns that the limited coverage allowed by the 20-year-old rules has not kept pace with rising healthcare costs and has been inconsistent with the state's recent overhaul of the health insurance system, said Commissioner Sarah Iselin.

A 1988 state law mandates that all part- and full-time students have health coverage. Most of those 77,800 covered by the student health program have plans that cap payments at $50,000 a year per injury or illness. That limit can be easily exceeded by cancer treatments or one hospitalization after a serious accident. Iselin said her agency, which regulates student health plans, is considering whether to mandate more generous benefits.

The problem of limited student health insurance is hardly unique to Massachusetts. New York's attorney general launched a probe last month into such insurance plans, reportedly focused on the adequacy of the disclosure of policy terms and costs to students. More than half of the student health plans studied nationwide capped the maximum benefits paid for an injury or illness at $30,000, according to an investigation earlier this year by the Government Accountability Office, an arm of Congress.

In Massachusetts, the contrast between student policies and other healthcare policies is stark; the capped coverage allowed for students fails to meet the minimum standards set for other plans as part of the state's 2006 near-universal health law.

Insurers say the college policies, with premiums that typically cost students $2,000 or less a year, are as comprehensive as possible given the need to keep the price tag affordable. It is, they say, a balancing act.

School administrators, meanwhile, say they, too, face a tough choice in juggling costs versus quality when negotiating these plans with insurance companies. "It's really a challenge to find benefit levels that are affordable," said Michelle Bowdler, senior director of health and wellness services at Tufts. She said the university's plan raised its overall coverage cap from $50,000 to $100,000 about three years ago because Tufts officials thought $50,000 wasn't enough.

Iselin said her division would probably start requiring schools to track how many students have faced medical bills beyond what their policies covered and to submit health plans for review before the start of each school year; now the policies arrive in November, three months after they begin.

Students are also faulting the state for allowing insurers to impose limits in other areas. Many cap prescription drug benefits at $1,500 yearly and limit outpatient services.

As part of taking a "really hard look" at the student health plans, Iselin hired an actuarial company this fall to study the financial impact on students if regulators required insurers to provide more generous benefits. The data are due in February. "The challenge is to strike a balance, to ensure the adequacy of these benefits . . . with the affordability," she said. "We may find that increasing [benefits] may not, in fact, turn out to be hugely expensive."

Aaron Marden, is a Tufts senior who founded the Student Health Organizing Coalition this fall. Marden said he and other coalition leaders who met last month with Iselin's office were not told about the state's plan to overhaul regulations, nor asked to join an 11-member advisory group appointed by Iselin. Marden said his coalition presented regulators with a list of questions and requests for data including whether insurers are applying a reasonable percentage of profits toward students' medical services. A recent Business Week investigation of student health plans nationwide found the plans to be unusually lucrative for insurers.

Iselin acknowledged that her division lacks that information and said it would probably require schools or the insurers to start reporting it as early as July.

-Adapted from “State to review limited coverage, caps in student health plans:Regulations will be overhauled”, By Kay Lazar, The Boston Globe, December 21, 2008 at http://www.boston.com/news/local/massachusetts/articles/2008/12/21/state_to_review_limited_coverage_caps_in_student_health_plans/, retrieved 12/24/08.

 

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