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New Policy Places Greater Consumer Protections on Student Health Plans

The Chronicle of Higher Education on March 20, 2012
by Libby Snyder

Health-insurance plans that colleges purchase for their students will soon be subject to stronger consumer protections similar to those set forth by the Obama administration’s 2010 health-care reform law, according to new federal regulations issued on Wednesday.

The new requirements from the Department of Health and Human Services call for the health plans that 2,000 or so colleges offer to about three million students nationwide to phase out caps on annual and lifetime coverage by 2014. The rules also require insurance companies to adjust their profit margins for student health plans, maintaining a “medical loss ratio”—a measure of what they cover in benefits as a percentage of what students pay in premiums—of at least 80 percent by 2014. And the regulations, which take effect January 1, 2013, bar student health plans from excluding students based on pre-existing medical conditions.

College-sponsored plans, like those offered on the individual market, will also be required under the new rules to provide students with coverage for preventive care—including contraception—without imposing cost-sharing measures like co-payments. Student fees, the rule clarifies, will not constitute co-payments. The rule also provides a one-year “safe harbor” for colleges that have religious objections to contraception.

Also on Wednesday, the Department of Health and Human Services issued a separate proposal,expanding on an initial one in February, that would give employees of religious institutions, including colleges, free access to contraceptives through health-care coverage provided directly by insurers. The proposal, which is now in a public-comment period, aims to relieve religious employers of paying for such coverage themselves. Some colleges have protested the underlying proposal, claiming that it impinged on religious freedom.

As for the student health-insurance plans, the final rule governing those was long-awaited, coming more than a year after federal officials sought public comments on the original proposal, and nearly two years after the passage of the Patient Protection and Affordable Care Act. In the end, though, it contains only a handful of significant changes.

“There weren’t a lot of surprises,” said Steven M. Bloom, director of government relations for the American Council on Education. “It was what we expected: that ultimately, the student health plans are going to be regulated in ways that are very similar to other plans sold on the individual market.”

The advocacy group Young Invincibles, which had pushed for greater consumer protections for students enrolled in college-sponsored plans, said the new regulations would end “some of the worst practices in the college health-plan industry.”

“This is a real victory for the health of students everywhere,” Aaron Smith, the group’s executive director, said in a written statement.

Bryan A. Liang, executive director of the Institute of Health Law Studies at California Western School of Law, called the new regulations “quite a good set of rules.” They clarify many questions left unanswered under the original proposal more than a year ago, he said.

Still, the new regulations leave one matter unresolved, said Dr. Liang, who is also director of the San Diego Center for Patient Safety at the University of California-San Diego School of Medicine: How will the new requirements affect self-insured plans for students, in which institutions—rather than insurers—collect premiums and pay claims?

Under the new and more-stringent regulations for profit margins, health plans administered by large insurers but sponsored by colleges could be less attractive to the insurers, many of which now offer them. In turn, Dr. Liang said he expected to see a “buildup” in colleges’ self-funded student plans, which now number only a few dozen nationwide, largely because they escape the federal regulations and the requirements of the 2010 health-reform law.

At this moment, it’s not clear how federal officials plan to address this question of self-insured plans, said Mr. Bloom, of ACE. Additional regulations, perhaps from the Department of the Treasury, could resolve it. In the meantime, he said, “We’re going to have ongoing conversations to figure out how that’s going to be handled.”