When President Obama signed The Affordable Care Act into law in 2010, his heart was in the right place, as the federal law requires every American to participate in a qualified health plan. On Wednesday the Obama administration proposed that student health plans that are self-funded by colleges (as opposed to insurance company plans) should qualify as “minimum essential coverage,” therefore meeting the federal requirement for health plan coverage. The loophole here is the proposed regulation effectively releases such plans from requirements that the Affordable Care Act enforces for other student health plans.
This unexpected proposal from the Department of Health and Human Services affects just about 30 higher education institutions, primarily major private and public research universities – including the University of California system along with many Ivy League schools – but consumer advocates are expressing concerns. They worry that more institutions, and their states, may move to self-fund their plans in efforts to bypass new federal requirements, in addition to saving valuable dollars. Self-funded health plans are less costly to operate when the middleman – the insurance company -- is out of the mix. The institutions that self-fund maintain their plans are high quality and generally meet the federal health overhaul’s requirements.
While proposing that self-funded plans qualify as meeting the “minimum essential coverage,” standard, the Department of Health and Human Services gave no indication that they had actually examined the existing school programs to be sure they did indeed adhere to the ACA’s minimum requirements for other insurance plans. With almost no indication as to why the agency took its action, the only comment was “even though student health plans are not individual or group market coverage, they are subject to certain consumer protections,” which presumably means by state governments.
Opposition Lends a Strong Voice
Consumer groups have been suspicious for a long time. Last August they expressed concern that more and more colleges might decide to self-fund to avoid the federal regulations. Even New York State has begun a pilot project to allow four universities there to experiment with self-funded programs.
In a report last summer, two health care advocacy groups wrote, “Because the federal government only extended the ACA’s protections to fully insured student health insurance plans, we are concerned that institutions of higher education may begin to self-fund in an effort to avoid new requirements.” They continued, “Without federal protections and only minimal state oversight, self-funded plans are free to discriminate based on preexisting conditions, offer limited coverage with low annual limits on benefits, and commit a number of abuses that the ACA was designed to eliminate.”
A group of University of California students are petitioning to implore the university to drop caps its self-funded plan imposes on health care coverage for individuals and prescription coverage, for example which would not be allowed under the fully insured plans.
This ruling from the Obama administration has caused major concern for student advocates. Jen Mishory, deputy director of Young Invincibles, which advocated on the behalf of young adults said, “We’re worried about the impact of the rule on the students in these plans now, and wouldn’t want other institutions to move in that direction.”
We need to revisit this issue to see if more institutions come on board with self-funded health plans, and evaluate its impact on students versus students with insurance company health plans.
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