The Uncertain Future of Student Health Insurance

Whether by design or unexpected consequence, it’s becoming increasingly clear that the Affordable Care Act (ACA) has thrown a gigantic monkey wrench into the provision of student health insurance plans at universities.

Since most of my research is on health insurance at the other end of the age spectrum, I had not paid much attention to student health insurance after my days as a graduate student at Rutgers.  While I was in graduate school, I actual served as a member of the graduate student employees’ union, and worked on the bargaining team during contract negotiations. Part of my work was benchmarking stipends and benefits at Rutgers compared to other major universities.  Until 2014, I had not given the topic much thought for 25 years.

That spring, however, Penn State and its students were surprised by a huge change in the health insurance plan being offered.  Two years before, Penn State had negotiated a fantastic deal, with graduate students having nearly full coverage above a small deductible. The third year of the contract, however, gave the insurer great latitude on premium changes and coincided with changes from ACA.  Because of the interpretation of ACA by federal government agencies, student health plans purchased from insurers could no longer be regarded as group plans, which, if they met “minimum essential coverage”, would have allowed students and universities to negotiate with insurers in a less regulated marketplace.  Instead, these plans were to be considered individual plans, and thus subject to the same regulations as plans on the ACA exchanges. On the one hand, students covered by these health plans now had the protections afforded other consumers.  But, that hasn’t been without consequences.

For Penn State and other students impacted by this, this meant that benefits had to fall in one of the ACA metallic tiers. In Penn State’s case, this occurred simultaneously with a plan year that had high expenses and the imposition of the new ACA taxes and fees.  The end result was a sizable cut in benefits AND a premium increase of more than 20 percent.

Unlike the health insurance market for employees, universities have few options to try to address any problems.  There are only a few insurers that provide health insurance plans targeted to students. In many states, self-insured plans are not permitted for students, thus eliminating that competitive option.

And this challenge is growing.  Recent regulations and guidelines have determined that university health insurance subsidies to graduate students may violate ACA regulations on employers and have clarified that rate review regulations also apply to student health plans. By reducing demand and raising costs, a thin market for insurance thins even more.

As a result, some universities are eliminating student health insurance plans. Others are eliminating health insurance subsidies, raising graduate student salaries, and encouraging students to look at the variety of plans available to younger consumers–student plans, catastrophic plans, parental plans, or ACA plans. And, to the extent that students do enter the ACA market, their low health care costs may keep insurance premiums in those exchanges down for all. By accident or design, it seems as if more and more students are being directed elsewhere.

Providing good health insurance to students has always been difficult. Students have diverse needs. Some are international students with little familiarity with America’s complex health system. Out of state students have to consider whether a plan from home can provide an adequate network of providers while they are at school. Low income students may be covered by Medicaid, but coverage issues can be an issue for them, too.  And student health plans were always plagued by risk selection issues. Students are new to purchasing health care and health insurance and often ned good support making their decisions

Perhaps, ACA plans will reduce those problems for students. They’ll offer their own challenges for students.  Universities and ACA exchanges, along with others, ought to build a more robust system to support students in finding their path to adequate health coverage.


Leave a Reply

Your email address will not be published. Required fields are marked *