Proposed student health plan Affordable Care Act compliance regulations could reduce use of the plans but probably will not hurt the credit quality of the big health insurers.
Analysts at Moody's Investors Service come to that conclusion in a comment on proposed rules that the U.S. Department of Health and Human Services (HHS) wants to use to help student health plan plans comply with the Affordable Care Act, the legislative package that includes the Patient Protection and Affordable Care Act (PPACA).
HHS officials say in the preamble to the proposed student health plan regulations they tried to completely or partly exempt student health plans from some PPACA rules that would make a student health plan almost impossible to run, such as rules that would require the plans to be sold on a guaranteed issue, guaranteed renewable basis starting in 2014.
But HHS tried to have the student plans comply with the spirit of the PPACA phaseout of annual benefits limits by requiring that the plan provide an annual benefit limit $100,000 in 2012, provide a $2 million limit starting after Sept. 23, 2012, and eliminate annual limits starting in 2014.
Because there are only about 1.5 million in student plans, the effects of the proposed regulations on the issuers is not a concern from a credit perspective, the Moody's analysts say in their comment.
"The new regulation, if adopted, could result in a decline in enrollment owing to the premium increase expected as a result of the greater benefits being provided," the analysts say.
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