University Health Insurance Falls Short

Business Week reports on the growing problem of sub-standard health insurance being offered by universities to their students:

More than half of the insurance plans recommended by colleges offer benefits of $30,000 or less, according to a survey published in March by the General Accounting Office, an arm of Congress. Many plans have further limits that prevent payout of even modest maximums. While two-thirds of the country’s more than 17 million college students have coverage from a parent’s employer or their own job, many of the rest may be vulnerable if they suffer a serious illness or accident. With premiums and restrictions increasing under employer-provided plans, a growing number of parents are shifting children to college-sponsored coverage. But “when a student gets gravely sick, $30,000 in benefits is unrealistically low,” says Alan Sager, a professor at Boston University’s School of Public Health.

Schools often arrange for a standard student plan, and some even bill for it automatically unless students or their families opt out. But the administrators negotiating multimillion-dollar insurance packages frequently aren’t sophisticated or diligent enough to obtain the best deals in the marketplace, says Mark Rukavina, executive director of the Access Project, a nonprofit health advocacy group in Boston. “Unfortunately, most schools don’t know how to secure the best coverage for students, and so what results is simply the illusion of coverage.” Students and parents, for their part, often don’t take the time to study the fine print.

The really unfortunate aspect of this is that students and their families are looking to the schools to provide unbiased expert advice. Many appear to be substituting faith in the university’s judgment for doing their own due diligence. Yet the universities are doing a lousy job of earning this trust.

The good news is that students are very well-positioned to get coverage elsewhere, often for less money and with better benefits. Non-profit associations like Fractured Atlas can serve as effective advocates and are more aggressive about negotiating favorable benefits packages. And as the article points out, even the individual market often offers better deals than what the universities are providing.