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Health Care Reform: Opportunities to Address the Shadow Uninsured Student

University Business, Apr 2010

Health legislation having passed, it's difficult to ascertain its specific effects. Winners could include college students. But this can only occur if universities act to fulfill their fiduciary obligations and avoid suspect school health plan practices benefiting the school over the student.

The reform creates several important mandates to improve health care access. Statewide exchanges will offer products that have no pre-existing condition exclusions, eliminate lifetime caps on services, require 80-85 percent of the premium dollar to be spent on health care services, and will allow students to stay on parents' health care plans until 26.

All this is good. But will these policies improve student access to health care on campus?

University health programs must be better stewards of their beneficiaries' funds.

Unfortunately, it may not. According to a GAO report, most schools don't allow students - the vast majority with health insurance through their parents - to use this coverage on campus. Amazingly, schools reject it, then charge students in some cases up to 500 percent more for preventive and other services if they don't pay for the school's health plan. But these school plans, highly lucrative for the school and its insurer partners, have significant internal limits on coverage, excessive administrative costs, and, according to a Business Week investigation, often spend far less than 80 percent on services (some as low at 10 percent) while capping student coverage at as little at $30,000 per medical condition.

The result? Insured students and families are actually paying three times: for private insurance, for an ever-increasing school health fee, and for additional expenses such as lab tests uncovered by even campus plans. Compare this with a simple co-pay under standard insurance. So "insured" students aren't insured at all as soon as they enter campus grounds - they are the uncounted, shadow uninsured.

In addition, under health care reform, uninsured students will have access to insurance plans through statewide exchanges. But again, given the standard university policy of prohibiting use of private insurance on campus, these uninsured students now join the ranks of the shadow uninsured and continue to lack access on campus. This result flies in the face of health care reform goals.

Instead, taking into account the reality of health care reform, private coverage, and student needs, university health programs must be better stewards of their beneficiaries' funds. Schools can promote student health in several ways.

First, simply accept private insurance. Since most students have their own health insurance, universities must adapt to accept this coverage for campus healthcare services. Universities should get school providers into insurance provider networks. Thankfully, this should be facilitated by insurance available in the statewide exchanges where the university is located.

Second, consider outsourcing or engaging in health services billing. Accepting private student insurance provides the opportunity to bill for campus health care services. Schools have outsourced other functions such as food services, campus infrastructure support, and other operational facets, and can outsource billing as well. Diverse institutions including Arizona State, Bowling Green, Butler University, Georgia Southern, Ohio University, and others have garnered significant surpluses from this activity to support updating hard assets as well as expand services. Others, such as Alabama, Auburn, and Western Kentucky, have adapted their own systems to do this themselves with similar benefits.

Third, terminate school plans focused on school and insurer profits over student welfare. Beyond a violation of fiduciary duty, significant legal and ethical issues are implicated. The conflict of interest of school-insurer arrangements appears similar to the student loan scandal, where schools were profit-sharing by pushing students to specific lenders. Of course, school plans will also be subject to tremendous scrutiny on low premium spending, coverage limits, and exclusions that may violate health care reform laws.

Finally, reallocate the student health fee. Private insurance reimburses for medical services. It cannot cover the entire health center budget. However, the health fee, paid by all students, could fund non-reimbursable services, such as wellness and prevention programs, as well as prepay co-payments and deductibles. This would be an appropriate use of it, rather than attempting to use it to fund the lion's share of campus health operations, and thereby causing unsustainable annual increases.

As Spencer Turner and Janet Hurley wrote in their seminal work, The History and Practice of College Health, "The mission of the student health service - to keep the most students at the most books the most time - can no longer be carried out in isolation. We need health care pioneers who can forge new alliances and new partnerships, who can accept the challenge of doing more with less, and do it exceedingly well."

With tuition inflation outstripping inflation 20-120 percent annually, students are facing continuously increasing debt loads. They should not be required to pay for health care coverage multiple times. If university health aims to survive, it must accept health care reform principles, and integrate private insurance coverage. Otherwise, students may vote with their feet, creating additional financial pressures, declining services, and the possible extinction of university health care programs.

Bryan A. Liang, MD, PhD, JD, is executive director, Institute of Health Law Studies, California Western School of Law, and co-director, San Diego Center for Patient Safety, University of California, San Diego School of Medicine. He is the author of the forthcoming report, "Crisis on Campus: Student Access to Health Care," in the University of Michigan Journal of Law Reform.

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