The Affordable Care Act (informally known as Obamacare), which mandates that all citizens acquire health insurance by 2014, will have an impact on college students—particularly low-income students and those whose education is publicly subsidized. Stephen M. Jordan, president of Metropolitan State University of Denver, answers questions about the issues confronting colleges and universities as the deadline approaches.
What effect could the insurance mandate have on students, and by extension, on institutions?
The individual mandate will hit low-income students hardest. Trying to make limited funds—income from employment, federal loans, or state grants—stretch to cover both insurance and educational costs will be tough. For example, our students receiving the maximum Pell Grant of $5,775 pay tuition and fees of about $5,340. After purchasing books, not much is left for living expenses, let alone health insurance, which costs $1,800 per year at MSU Denver, presenting students with a Catch-22: insurance or education?
As educators, we want students’ priority to be education, so we have to help solve the insurance conundrum. Many institutions do not provide their own insurance option, relying on private insurers’ student policies. It’s likely that those will be discontinued under the Affordable Care Act. Institutions should start researching and planning now how they will ensure that students have health insurance.
What do boards need to know about student insurance options?
Having a clear picture of your student population is critical. Students’ economic circumstances at a commuter institution such as MSUD likely will be very different from those of students at private liberal arts institutions or large public universities.
Students will have four health-insurance options: 1) receive coverage under their parents’ health-insurance (until age 26) or through their employer; 2) qualify for Medicaid; 3) purchase insurance through state-sponsored insurance exchanges; or 4) acquire insurance offered through their college or university. These last two groups of students are the ones boards need to be most concerned about, especially if their student population is primarily lower income and reliant on public educational funding. Those are the students most likely to fall through the cracks.
According to a 2008 Government Accounting Office study, about two-thirds of students are covered under their parents’ insurance, with about 7 percent (600,000 students) buying their own, usually through their institution. Most institutions currently offer limited-benefit plans or payout caps. Starting in the 2013–14 school year, plans must cover up to $500,000 in medical expenses, with no cap enforced after that.
Why not rely on the insurance exchanges for student insurance coverage?
That would be the easiest course if it were the most cost-effective for students, but it probably will not be. The Affordable Care Act prescribes four levels of coverage: platinum, gold, silver, and bronze, each covering the same essential benefits but with varying levels of cost-sharing between the insured and the provider, depending on the state. The bronze level cannot cost less than one-third the amount of the platinum level, and college plans may offer policies to enrolled students at lower rates than this 3:1 ratio. Precise levels could vary based on state and age of student. Knowing students might have to choose between education and insurance, it seems clear that we need to creatively approach making it possible for them to have both.
How is it possible to be creative with health insurance?
The same kind of thinking that makes it possible to maintain operations in a down economy must be applied to student health insurance. One possibility may be to form a buying consortium with other institutions, perhaps through a regional interstate education compact, thus creating a larger pool with lower per-student insurance costs. Another approach might be to recruit community partners, such as hospitals or large medical practices, into a network providing health-care services for students.
Each institution must find an option to fit its circumstances best, but now is the time. 2014 will be here before we know it.