Insurers in the student health market are going through their own version of what’s happening in the rest of the U.S. health insurance market.
New Patient Protection and Affordable Care Act (PPACA) rules are causing more money to flow in — and more money to flow out.
Saurabh Nair has given a glimpse of what’s happening on the revenue side in a new SNL 2013 student health premium data report.
Few agents or brokers will get rich quick from selling student health insurance, but participating in the market may be a way for producers to get to know the students’ parents, and a way to build relationships with young consumers who may soon be prime, easy-to-underwrite prospects for a wide range of financial services products, including life insurance, disability insurance and supplemental health insurance.
On the demand side, the PPACA “shared responsibility” mandate will require many Americans to have a minimum level of health coverage in 2014 or else face the possibility of paying a penalty. Extra students may have paid to get covered toward the end of 2013 because of concerns about the 2014 PPACA mandate, or simply because of all of the new publicity about the importance of having health insurance.
On the supply side, the U.S. Department of Health and Human Services (HHS) has been giving student health insurers more time than sellers of other types of health insurance to comply with potentially expensive new PPACA medical insurance requirements, such as the ban on annual benefits limits and the minimum medical loss ratio (MLR) requirements. But HHS increased the minimum annual limit cap for insured student health policies to $100,000 for policies with policy years beginning from July 1, 2012, through Sept. 23, 2012, and to $500,000 for policy years beginning from Sept. 23, 2012, through Jan. 1, 2014. HHS prohibited new insured student health plans with policy years starting on or after Jan. 1, 2014, from capping annual benefits.
HHS began applying an adjusted form of the MLR rules to insured student health plans in 2013 and now applies the full PPACA MLR rules to insured student health plans.
So, how did health insurers in the student health market do in 2013, the last year before PPACA rules were set to take full effect?
Total premium revenue grew 21 percent, to $1.7 billion, but the average industry MLR increased to 79.13 percent, from 76.34 percent in 2012.
The total amount of cash the insurers had left over for administrative costs and profits after paying claims and quality improvement expenses increased about 6 percent, to $363 million.
The SNL report includes premium data filed by life, health and property-casualty insurers. The report does not include data for colleges and universities with self-insured student health plans.
See also: 10 top health insurers report Q2 enrollment.
To view the results for the top five players in the market, including their 2013 market share figures and premium totals, read on.
5. BCS Financial Corp.
2013 market share: 3.3%
2013 premiums: $57 million
2012 premiums: $33 million
2012-2013 change: 74%
BCS Financial Corp. is owned by the carriers in the Blue Cross and Blue Shield Association.
The company uses its student health unit Web page to reach out mainly to insurers, but also to agents and brokers.
“You covered the last generation,” the unit tells potential distributors. “Now you cover the current generation, too. So why wait to start covering the next generation.”
The unit offers accident-only programs as well as accident and sickness programs.
4. Health Care Service Corp.
2013 market share: 3.6%
2013 premiums: $62 million
2012 premiums: $25 million
2012-2013 change: 149%
Health Care Service Corp. (HCSC) is the parent of the Blues plans in Illinois, Texas and other states.
The company’s AcademicBlue unit offers plans written by Blue Cross and Blue Shield plans in Illinois, Montana, New Mexico, Oklahoma and Texas.
The quiet giant aims its student health Web page at college administrators, telling administrators that “your students” will get access to a national provider network through the BlueCard program.
3. Nationwide Mutual Group.
2013 market share: 4.4%
2013 premiums: $76 million
2012 premiums: $66 million
2012-2013 change: 16%
Nationwide Mutual is not known as a player in the ordinary major medical market, but the company’s Nationwide Specialty Health unit has a significant presence in the student health market, with about 100,000 student enrollees at about 100 U.S. schools of higher education.
Nationwide underwrites a major health insurance program for international students as well as high-profile programs at Touro University and the Claremont Colleges.
The company aims its student health website at college administrators, and at the agents and brokers who serve the administrators.
2. UnitedHealth Group Inc.
2013 market share: 25%
2013 premiums: $428 million
2012 premiums: $353 million
2012-2013 change: 21%
The UnitedHealthcare StudentResources unit at UnitedHealth (NYSE:UNH) has a high-profile program at the College of William and Mary, and major affiliations with Mortar Board and Harvard Pilgrim Health Care.
The company’s student health website includes links aimed at schools that are issuing requests for proposals as well as links aimed at students and parents.
1. Aetna Inc.
2013 market share: 36%
2013 premiums: $624 million
2012 premiums: $561 million
2012-2013 change: 11 percent
Aetna (NYSE:AET) has major student health programs at universities such as Columbia, Cornell and Drexel.
On its student health website, the company offers a Mindbloom life planning tool as well as general information about health insurance and a discussion of PPACA.
Students who use the Mindbloom tool get advice on how to “Grow the life you want.” One section gives users tips on a strategy for figuring out what they think this important. Another section gives users ideas about how to get motivated, and a third section gives users advice about how to take meaningful action.