Health Care Reform Threatens College Plans

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Colleges are growing increasingly uneasy about provisions in the recently enacted health care law, claiming it places an unfair burden on schools who offer students health coverage.

According to the Government Accountability Office, about half of all U.S. colleges offer health care to students. Approximately 7% of students use the coverage, and 80% are covered under their parent’s health plan, the GAO says.

In a letter dated Aug. 12 from the American Council on Education to U.S. Health and Human Services Secretary Kathleen Sebelius, the ACE asks the federal government for relief from certain provisions in the new health care law.

The ACE, which claims to represent schools and colleges that cover 4.5 million students with health care insurance, responded:

"We are concerned the application of several provisions under the Patient Protection and Affordable Care Act, including certain insurance market reforms and the individual mandate, could make it impossible for colleges and universities to continue to offer student health plans. In order to preserve the ability of institutions to provide this affordable coverage under ACA, we would like to work with you to secure the urgently needed regulatory confirmation described in the attached issue paper."

As usual, it comes down to money. For instance, most student health care plans have annual caps in coverage, and the new health care act bans such caps. Under the new rules, health insurers must offer at minimum $750,000 in coverage annually — a number that has colleges balking, saying this will lead to much higher insurance premiums.

Besides the cap issue, the ACE expresses concern about colleges’ ability to accommodate the individual health care mandate, especially if it means they’ll have to offer health care coverage to non-students. College health insurance advocates say their plans are different than traditional plans in that they only cover the students for the full school year, but not the full calendar year. That should exempt them from the individual mandate, the ACE attests.

The group also says the insurers they work with shouldn’t have to pay 80% of their revenues on medical care, as the new law dictates.

If left unaddressed, the ACE says that colleges and universities may no longer be able to afford to offer student health care. While there’s no immediate danger of colleges pulling the rug out from under students currently covered by such plans, the ACE says that many schools are currently negotiating with their insurers about new coverage in advance of the 2014 launch date for the new health care rules.

In the end, what the question comes down to is this — should college student health care programs be held to a different, more lenient standard?
If the ACE gets its way, they will. But Uncle Sam may have other ideas.

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