State to review limited coverage, caps in student health plans
Regulations will be overhauled
By Kay Lazar
Globe Staff / December 21, 2008
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.
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.
Another 225,000 college students have declined the student health insurance program, meaning they are choosing instead to be covered by their parents’ plan or some other private plan. A 1988 state law mandates that all part- and full-time students have health coverage.
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.
“To say it’s OK for you to receive substandard care because you made a choice to be a student, that is offensive,” said Heather Knauer, a 23-year-old Tufts University senior.
Knauer said her parents have already refinanced their house to pay her sister’s medical bills. Knauer’s sister, a college student in New York, had a school health plan with a $25,000 cap. So when it came to her own treatment, Knauer recently made a pragmatic choice: She is skipping the $400 monthly injections advised by her doctor to treat her endometriosis. Instead she is opting for a much less expensive hormone treatment with harsher side effects – she is losing her hair – so she won’t exceed the $1,500 yearly cap on prescription drugs in the health program from Tufts University.
“I am stuck,” she said, “between a rock and a hard place.”
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.
Word of the state’s planned overhaul comes as college students lobby for better health coverage. Knauer is one of several students who recently met with Iselin’s division and asked, among other things, for data about how many students have faced medical bills beyond what their policies covered – something officials were unable to provide, Iselin acknowledged.
Iselin said her division would probably start requiring schools to track that number 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.”
That is what the students hope to see. “These plans are downright pathetic,” said Aaron Marden, a Tufts senior who founded the Student Health Organizing Coalition this fall. The Tufts coalition is planning to form chapters on other campuses.
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.
“I would like to see, at the very least, large, large warnings, for colleges to have to say that before you sign up for this plan, this may not be appropriate,” said Mark Wiranowski, 37, of Jamaica Plain, who was covered under his wife’s Simmons College plan, capped at $50,000, when a boulder crushed his leg while he was hiking last year in the Rockies. His medical bills were nearly $400,000. Through state and other financial aid, Wiranowski said he eventually got all but $10,000 covered.
“I was unprepared for how enormous medical bills can be and how woefully inadequate the student health plan was, and I was too busy to do the research,” he said. “I am fortunate I was not bankrupt.”
