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In Favor of Quality Affordable Student Health Insurance and Comments on SB 609, An Act Relative to the Qualifying Student Health Insurance Program
Joint Committee on Health Care Financing

MASSPIRG is a member-supported, statewide non-profit and non-partisan public interest organization. We work closely with our sister organization Mass Student PIRG, a student directed non-profit organization with chapters on 17 campuses from UMASS Dartmouth to Berkshire Community College.

We are here today to let you know that the student health care system (Student Health Plans, SHP) is broken, and it must be fixed to ensure that college students in the state will receive the same protections and benefits afforded to most everyone else through the 2006 landmark Health Reform Law.  

Problem:

All students enrolled in colleges and universities in the state are required to have health insurance – while most students (73%) are insured through their parents, spouse or employer approximately 97,000 (27%) students purchase a health plan sold through their school. The Student Health Plans (SHP) are often a much lower quality plan than what is offered to most others in Massachusetts under the state mandated minimum standard called Minimum Creditable Coverage (MCC). The SHP are loaded with coverage caps, service caps, high out of pocket expenses and exclusions for services. Specifically, the benefit concerns include: 

Basic services can be excluded
•    For example, prescription drug coverage, elective surgery, behavioral health services

Plans can include benefit caps
•    Annual benefit caps as low as $50,000 are allowed
•    Lifetime caps are not prohibited or limited
•    Per service caps are permitted (e.g. $1500 cap on outpatient services)

Plans can include unaffordable cost-sharing
•    High out-of-pocket expenses as maximums are not required

Not only do the Student Health Plans offer inadequate coverage, they are a rip off and should not be allowed to be sold in the state. According to a recent report prepared and released last month by the Massachusetts Division of Health Care Finance and Policy an average of 30 cents of every premium dollar for the Student Health Plans goes toward profits and administrative costs compared to 12 cents for plans sold to the general population. Students at state schools faced the greatest disparity with a whopping 45 cents of the insurance dollar going to profit and administrative costs. In short, students pay more for less coverage, and the coverage they are getting isn’t very good.

Solution:

Quality Insurance:
S. 609, An Act Relative to the Qualifying Student Health Insurance Program, would amend Section 18 of Chapter 15A of the General Laws (the requirement that every student enrolled in an institution of higher education in the Commonwealth have comprehensive health insurance coverage) to require all student health plans to meet the minimum creditable coverage (MCC) standards set by the state’s Health Insurance Connector Authority.   This would guarantee our state’s college students have access to several routine medical exams before having to pay a deductible; prescription drug coverage; capped deductibles and out-of-pocket spending; and no cap on medical benefits.  Mandating that all student health plans meet MCC would close the student loophole and end the unfair distinction between them and the rest of the population.  

Fairly Priced Insurance:
Insurance companies should be prohibited from selling Student Health Plans with medical loss ratios higher than the average medical loss ratio in the state, which in 2008 was 88%. In fact, because students as a group are generally healthier than the average insured in Massachusetts, the medical loss ratio could even be higher.
 
Medical-loss ratio refers the difference between how much of every premium dollar an insurer spends on claims of medical benefits and how much an insurer spends on administrative costs (employees’ salaries, marketing, research, etc.) and profits.  A November 2009 report released by the Division of Health Care Finance and Policy found that the average medical loss ratio of the Student Health Plans were 69%, with the state colleges averaging the worst at 54%, compared to the private market average of 88%. Clearly the Student Health Plans have an excessive level of profit and administrative expense that should not be allowed.

Affordable:
The student loophole in the 2006 Health Care Law should be fully closed allowing the students access to both the responsibility and the benefits of the Law. Students are already required to purchase insurance, we must insure that the health plans are of good quality and are priced fairly. Additionally, like other residents of Massachusetts, if a student cannot afford health care, the state should subsidize it to make it more affordable, through Commonwealth Care. Over 60% of students in Massachusetts are graduating with an average of $23,000 in student loan debt, so forcing them to have to shoulder a higher premium only deepens the debt they have to repay after graduation.

Whether through legislation or through administrative authority at the Division of Insurance, we must act now to protect students, ensure they are sold quality health plans, and stop the insurance companies from gouging students with health plans where the profit and administrative expenses are 4 times that of the average policy holder in the state.

Deirdre Cummings
Legislative Director
MASSPIRG    

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