Yamileth Medina

Overpriced Health Insurance Plans For Students



Posted: Tuesday, November 10, 2009

by
VitalOne Health

When talk of healthcare reform has turned to young adults, it has normally served to use them as a political football. Either they are the "young invincibles" who must be forced by strict mandates penalties to buy a health insurance plan, or they are the martyrs paying higher premiums to support older people while the budget deficit is passed onto their generation. Despite those stereotypes, many college students have recognized the necessity of having health insurance. Many of them are covered under their parents' health insurance policies; the House of Representatives' bill allows young adults to stay on those plans until they turn 27, effective immediately. Unfortunately, not all members of this age group are so lucky. In Massachusetts, where having health insurance is mandatory, a recent investigation discovered that students are paying more for lower-quality care. Many young people decide to buy high-deductible health insurance plans, which are often ideal for healthier individuals at low risk. In turn, they pay lower premiums. Although a lot of people are knowledgeable about the trade-off inherent in such plans, quite a few of the options marketed towards college students fail to meet the minimum coverage standards required of all other policies by the state's healthcare reform. For example, outpatient benefits such as doctor visits and prescription drugs are severely limited compared to similar plans promoted to the general public. In addition, the majority of these plans cap hospital reimbursements at $50,000 per year. Hospitalization can be very expensive, and treatments for serious illnesses can cost hundreds of thousands of dollars. If a student is diagnosed with cancer or gets in a horrible car accident, they may receive another shock after they receive their bills. Isn't the purpose of health insurance to protect from unpredictable illnesses and accidents?

The health insurance plans promoted to college students don't make up for a lack of quality with low price. Granted, they are inexpensive compared to the full cost individual health insurance students are allowed to buy on the open market. However, the demographic as a whole doesn't earn high incomes, which leaves regular insurance policies that cover standard care out of reach. Meanwhile, the public option subsidized by the state for similarly low-income individuals is not open to them. Students whose parents can't or won't keep them on their health insurance plan have relatively few other options. Those who are working are normally employed in part-time jobs, which are extremely unlikely to offer affordable health insurance. Even the small percentage of married college students are out of luck in acquiring insurance through their spouse, since their significant other is probably within the same age group and in a similar predicament.

Private health insurers have been accused of earning massive profits and passing those costs onto the consumer. Health insurance plans marketed towards students have largely escaped this scrutiny, but their profit margins turn out to be far more shocking. On average, such plans have been found to waste a far greater percentage of premiums on administrative costs and profits than the average health insurance plan in Massachusetts. Attendees of state universities, who often attend due to affordability, are gouged even further--the plans promoted by their colleges spend up to 45% on costs unrelated to medical care!

Several organizations are lobbying to change the system and make buying health insurance plans more fair for students. Adding the potential of medical debt on top of increasing amounts of student loans. Regulators plan to help colleges and universities purchase group insurance more effectively. Some insurers may plan on students selecting any plan from the first company table they see on campus in order to comply with the mandate, and the general public not taking notice. With the House of Representatives passing healthcare reform on a national level, though, this may change. There will probably be more pressure on insurers as more students are affected by similar, inferior plans.

(Image: Wigstruck under CC 2.0)

Yamileth Medina is an up and coming expert on Health Insurance and Healthcare Reform. She aims to help people realize that they can get a health insurance plan right now while waiting for a public option, if it ever gets passed. Yamileth lives in Miami, FL.
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