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Students' health insurance costs could go up

Program will be revised to avoid ‘death spiral’

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Posted: Tuesday, November 5, 2013 2:48 pm

Students on the University health insurance plan may see an increase in premiums, a change in benefits or even closure next year in the wake of the Affordable Care Act. 

“So whether or not there will be a student health insurance program next year is going to be really dependent on a really simple question: Can we offer an equal or better plan for less?” said Rick Curtis, director of Curry Health Center.

The program, known as SHIP among administrators, has been losing money since 2010, Curtis said. It currently has 2,406 students enrolled.

To stay competitive and retain applicants, university system administrators now need to figure out how to keep premiums low in the program as complex federal health care policies take effect.

Since 2010, the student program has faced declining enrollment and higher monthly premiums.

Enrollment in SHIP declined sharply with the passing of health care reform in 2010, Curtis said. As people under the age of 26 became able to stay on their parents’ dependent plans, students left the school plan.

It was a good move for the students, Curtis said, but that left the University program with a smaller pool of customers to pay into coverage. That is an essential element of health insurance — having enough healthy people paying premiums to cover the cost of insuring those who need major treatment.

Joshua James is one of those healthy students. A junior in media arts, he has been on the student plan for two and a half years, using it only for dental work and minor colds. He said he chose the program because it was accessible and affordable, but his bill has increased every year. Another increase could send him looking elsewhere for insurance.

“If it went up more than it already has, I would [look at other options],” James said. “I’m 23, no major issues, and the most I need is dental work.”

Premiums have increased an average of 12 percent annualy since 2009. This academic year, a plan for a student under 40 is $1,011.

The bill for those enrolled for the 2013-2014 academic year will remain the same through August. But two major provisions of the ACA may increase premiums yet again for the next enrollment period. 

The plan will no longer maintain its exclusionary period for preexisting conditions. Before, students had to wait 12 months to have full coverage of a pre-existing condition within the copay and deductible provisions. Now, benefits would begin right away.

Furthermore, insurers can no longer put a cap on the amount of benefits paid out. The terms of the insurance plan would apply no matter how far above a deductible the treatment costs.

Curtis said extending that coverage could potentially drive up the cost burden for the University program’s insurer, Blue Cross Blue Shield of Montana.

“You have to make sure that you have a large enough reserve to fund that event,” he said. “So, with the Affordable Care Act, reaching these essential elements, the premium has to go up.”

The situation becomes more challenging due to the demographics of students in the University program. If most of the students who left the program were younger—statistically healthier people—those who remain would tend to be older and more prone to making large insurance claims.

That combination of higher claims from a smaller but older pool of insured people is more expensive for the insurer. If the insurer then raises premiums too much to cover its benefits, more people will leave for cheaper plans. 

That leads to what Curtis calls a “death spiral,” an unsustainable consumer base that could lead to the end of student health insurance in Montana.

“The only thing that will prevent the death spiral is if the SHIP can offer the same or better coverage at a lesser price than the (ACA) marketplaces or what the students’ parents are paying for the insurance,” he said.

Officials of the Montana University System have started the process of crafting an attractive, sustainable plan to keep students like James in the program. Curtis said a consulting firm will be hired to aid in the process to determine whether or not a long-term program is possible.

"We literally treated it as if this was the first day of the University System and we were starting from scratch; how we would build it today," said Connie Welsh, director of benefits for the Montana University System.

It’s a balancing act between maintaining a competitive price and offering good benefits. In the past, Curtis said, the price of the University plan sold itself. If premiums rise, then added perks must add value. Vision and dental care coverage, for instance, could be ways to go above and beyond the basic packages in the ACA marketplace, where people can go online to shop for health care.

Much of the information on health care reform became available as recent as Oct. 1, Curtis said, so it will take some time to determine a monthly premium for the next academic year, starting September 2014.

The Montana Board of Regents and BCBSMT will work with the universities to craft the new program. Curtis hopes to have a monthly cost figure available in April for students to incorporate into their financial plans.

The biggest challenge is making decisions as the entire health care industry experiences change, Welsh said. The goal is to determine the university system's role in student health care and whether they are best suited to be providers or liaisons in the new market.

While he’d like to see the program continue, Curtis said it’s important that students get the best deal with their health insurance, even if it isn’t from the school.

“If we can’t afford a better or equal plan for less, why should we exist?” Curtis said.


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