Colleges and health insurance groups seem to agree that regulators ought to let health insurers keep student health insurance risk pool and the general individual health insurance risk pool separate.
Commenters have expressed that view in letters sent in response to drafts of regulations that the U.S. Department of Health and Human Services (HHS) is developing to implement the Patient Protection and Affordable Care Act of 2010 (PPACA).
In a packet of PPACA draft regulations – ”PPACA: Health Insurance Market Rules; Rate Review” (CMS-9972-P) — that came out in November, HHS officials asked whether the final version should let health insurers maintain separate student health insurance risk pools.
Jennifer Haubenreiser, president of the American College Health Association (AHCA), wrote to ask HHS regulators to let insurers keep the student health and regular individual health risk pools separate.
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Preventing insurers from putting the low-risk, low-cost student health plans in separate pools ”would greatly threaten the viability of these plans by rendering premium pricing cost prohibitive,” Haubenreiser wrote in the ACHA comment letter. “This would essentially diminish institutions’ ability to offer comprehensive coverage tailored to the needs of college students.”
Many colleges that sponsor health plans have submitted similar comment letters.
If PPACA takes effect on schedule and works as drafters expect, it will give individuals the ability to buy coverage on a guaranteed-issue basis starting Oct. 1, 2013. The first coverage sold under the new rules would take effect in 2014. PPACA would let plans charge older enrollees more than they charge younger enrollees, but the limit on the ratio between rates for the oldest enrollees and rates for the youngest would be 3 to 1. In many states, the ratio is now 4 to 1, or 5 to 1.
The composition of the individual market risk pool is an issue because insurers generally want the flexibility to make risk pools as small as possible, so that they can price coverage to fit actual claims risk more accurately, and consumers generally want HHS and states to make risk pools as big as possible, to reduce the likelihood that some residents in a state will pay much higher rates for coverage than other residents pay.
HHS has proposed limiting a state to splitting its market into seven or fewer rating areas, unless the state gets special permission from HHS.