Student health insurance faces scrutiny

Cash-strapped college students might have a hard time paying their medical bills because the insurance plans they buy through their schools may not be sufficient, charges New York Attorney General Andrew M. Cuomo.

"It is important for students to have adequate health care coverage to protect themselves during times of illness or injury, but a bad health insurance plan can have catastrophic and long-lasting effects on a younger person's life," Cuomo said in an April 8 statement.

Colleges usually require students to have health insurance, and most stay on their parents' plans. But about 1 million U.S. students get health insurance through their schools. In fall 2009, the New York Attorney General's Office subpoenaed insurance brokers and several large insurers of students to determine if there were problems in this segment of the industry.

The investigation of school-sponsored health plans sold to students in New York or to those from that state who are studying elsewhere is ongoing. So far, it has found that annual premiums range from $100 to $2,500, that some programs exclude preexisting conditions and others cap benefits at less than $25,000. Some plans have a per-illness limit as low as $700.

"Many of the sponsored health care plans looked at during our investigation leave students at risk while providing massive profits for insurance companies," Cuomo said.

The inquiry follows on the heels of a 2007 investigation by Cuomo's office into student lending. That resulted in the return of $3.5 million to students and additional regulation of that industry.

It's unclear yet how many school-sponsored health plans are involved, but the New York attorney general's office recently sent letters to 300 colleges, universities, professional schools and trade schools advocating review of these products.

The letters suggested that plans have no annual, lifetime or per-illness limits, and recommended that schools contract with insurers that pay out at least 85% of premiums in benefits. Intermediaries should be paid by the schools, rather than an insurance company, to minimize conflicts of interest, and school officials also should not receive any remuneration from insurers, the letters said. Coverage for preexisting conditions should be required.

These recommendations mirror those established by the American College Health Assn., and those who work in this area suspect that many health plans are probably already in line.

"The majority are good-quality insurance plans, but all it takes is one bad apple to make it look bad," said James Turner, MD, ACHA president and director of student health at the University of Virginia. "In fact, we totally agree with the investigation and the attention."

Those who insure this population also countered that most plans provided good value for the money paid.

"We continually strive to improve access to quality, effective health care for all Americans, including students. We have been actively working with the New York attorney general on this issue and remain committed to providing colleges and universities with affordable coverage that gives students meaningful access to health care services," said UnitedHealthcare spokesman Daryl Richard.

The New York Attorney General's Office has set up a Web site with information, complaint forms and a consumer hotline.