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The Deadly Smile

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The health insurance industry should avoid getting into direct fights with seriously ill college kids.

The topic came up in March, when an arm of the U.S. Department of Health and Human Services issued a final rule on how the Patient Protection and Affordable Care Act of 2010 (PPACA) will apply to the student health plans at colleges and universities.

PPACA is phasing out annual benefits limits and lifetime benefits limits. The PPACA minimum medical loss ratio (MLR) provision requires large group plans to spend 85% of revenue on health care and quality improvement efforts, and individual and small group plans to spend 80% of revenue on care and quality.

The law is clearly a poor fit for college students, who often have little money to pay premiums, rarely come down with any condition more serious than mono, and may be able to go to a free or cheap clinic for routine care, anyway. Annual premiums for typical student coverage might be about one-third the cost of comparable employer-sponsored coverage.

At one point in the preamble to the final rule, HHS officials note (maybe, in ever-so-official language, whine) that there’s nothing they can do about the PPACA statutory language. The law is the law.

Their way of giving student health plans a little relief was to let the plans multiply their claims expenses by 1.15 in 2013 to meet the MLR requirements and to let the plans cap annual benefit limits at $500,000 up until 2014.

During the 2009-2010 school year, 57% of student health plans had annual benefit limits, according to America’s Health Insurance Plans, Washington.

MLRs at the plans tend to run from 18% to 30%, even though the administrative costs tend to be relatively low, simply because the premiums are also low. One Washington state university, for example, says its insurance for a single student costs less than $1,600 per year for a plan with a maximum benefit of $100,000 for each sickness or injury.

The text of PPACA states that PPACA is not meant to interfere with the ability of colleges and universities to offer health plans, and AHIP warned that imposing the kinds of rules that HHS included in the final rule could prevent some schools from offering student health coverage.

About 10% to 20% of the readers of National Underwriter Life & Health and the sister publications that work with us to run the website like PPACA reasonably well, and about 80% of the readers think it’s the work of the devil.

They blasted the HHS final rule.

To me, it seems as if this issue is to PPACA opponents what the contraceptive benefits mandate is to PPACA supporters.

For PPACA supporters, requiring health plans to cover contraceptive benefits is a logical, cost-saving thing to do. But, from the perspective of anyone in the middle, it looks as if HHS picked a foolish, distracting fight that gets it into a war with grave, saintly looking nuns, rabbis and imams without having all that much to do with the health insurance meat and potatoes of paying for diabetes care and care for catastrophic strokes.

For PPACA opponents, getting into the wrong kind of battle over student health coverage could lead to hearings, rallies, televised special reports, and major metropolitan newspaper cover stories featuring soup-kitchen-running, guitar-playing college students with lovely smiles and the support of thousands of classmates who are skilled in the use of Twitter and Facebook.

When health insurers got behind the creation of the Children’s Health Insurance Plan, they helped save the private health insurance as we know it by moving the battleground away from sick babies. All opponents of the system had to do to counter logical, well-researched insurance industry defenses of the need to limit the benefits available to sick babies is to show a video of a sad looking sick baby.

I think health insurers and producers would be wise to keep the battleground far, far away from college students with beautiful, sad smiles. Make sure the relevant images are of obese people who continue to eat chocolate cookies and drink sugary soft drinks even though they already suffer from chronic, weight-related illnesses and elderly people who find the cigarettes they smoked and the beers they drank have caught up with them.

When the health insurance industry is trying to get help for student health plans and their insurers, the battle should be over what new mechanism is going to make it financially possible for health insurers to offer $1,600-a-year student health plans that are subject to PPACA requirements, not over exceptions to PPACA requirements that could lead to heart-rending reports about college students who would be living in health care utopia if not for that nasty health plan and its $500,000 annual benefit limit.


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