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How Obamacare Jeopardizes Student Health Insurance

As many young people switch to their parents’ plans, university-sponsored plans are losing money, forcing colleges to rethink how (and whether they should) offer health coverage.

One of the biggest benefit from the federal health-care law is the fact that young people can now stay on their parents’ insurance until the age of 26. But for those who get their coverage from their college instead (both young and old), Obamacare may be putting their plans in jeopardy.

Last month, Montana Public Radio reported that for the first time ever, the health insurance plan the Montana University System offers to students is losing money – and it’s partially because of Obamacare. In the last year and a half, many students left the university’s health plan for their parents’ plan, leading to an almost 15 percent drop in enrollment, from about 7,900 to 6,500 of the system’s more than 47,000 students, according to Connie Welsh, director of benefits for the Montana University System.

In addition, the recession has sent more older, less healthy adults back to school who are raising the costs of the program.

“We weren’t able to pay even claims let alone administrative costs,” Welsh told MPR.

As a result, Montana is looking for new ways to insure its student population. According to Welsh, there are three options: One, the university system could raise premiums and change coverage options to meet the changing population it covers. Two, the university system could run its own plan and stop contracting with a third party like Blue Cross Blue Shield. Three, the university system could help students buy insurance on the online health marketplaces if the rates improve.

But the last option could pose problems because students aren’t eligible for the same subsidies as others shopping on the marketplaces. According to Steven M. Bloom, the director of federal relations, government and public affairs for the American Council on Education, “the needs of this population might not be met by insurance plans bought on the individual markets. This population wants more robust family-planning coverage, more for drug and alcohol abuse treatment.”

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And Montana is not alone in this, according to Stephen Beckley, who has 20 years of experience reviewing college and university student health services.

“Many [colleges and universities] may be under extreme pressure to be out of the [insurance] game. But some will emphasize their access to health care and double down. I think we will see schools trying to be more nimble, offering options for students with all types of coverage depending on each situation. There is no right answer, but a lot of schools are saying this is a good opportunity to get out of the game.”

But even if some student health insurance plans are eliminated, “you could argue that is not such a bad thing,” said Bloom. “Some institutions had very comprehensive health insurance, while other schools offered very limited coverage. They might cover only up to $5,000 total; I am not exaggerating. When the regulations came out, we knew some of the minimal plans would go away.”

In Montana, for now at least, dropping coverage entirely is not on the table. “We don’t think we will discontinue it this year,” Welsh said, because for one thing, offering health insurance can be a competitive advantage in both student recruitment and retention.

The bigger reason, though, is to serve the students and the community in which they live. “We got into this [insurance] business because we didn’t require insurance.” (About two-thirds of public universities do not require their students to have health insurance, according to Beckley.) “There were high rates of uncompensated care, which becomes a community issue. We want to offer whatever is in the best interests of our student population, to provide insurance at a price that helps them manage their lives and progress to matriculation.”

David Levine is a GOVERNING contributor.
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