In light of federal health care reforms, Cornell administrators are examining how new regulations will affect the University’s Student Health Insurance Plan. On Sept. 23, the Patient Protection and Affordable Care Act — which was signed into law by President Barack Obama on March 23 — began allowing dependents to stay on their parents’ plans until age 26, regardless of the dependents’ student status, marital status or tax relationship with their parents.
Sharon Dittman, associate director for community relations at Gannett, said that, although it has become easier for students to stay on their parents’ health insurance, she did not know how the new law will affect SHIP enrollment nor how the legislation will affect overall insurance costs. If undergraduates and graduate students who pay for SHIP can demonstrate they have adequate coverage by January, Dittman said the University will allow them to opt out of SHIP and get a refund for the remaining months.
“Usually, when students enroll in [SHIP] they do so for a whole year ... or they get refunded for the second semester if they graduate during the winter,” Dittman said. “This year, students will have the opportunity to get the refund ... [Students] have to apply [for a refund] ... and show they are now on another plan that meets Cornell’s six criteria for adequate health insurance.”
Prof. William White, director of the Sloan Program in Health Administration, agreed with Dittman that the new healthcare law’s major effect on students will be in their ability to remain on their parents’ insurance until they are 26 years old, and long-term effects of the law are still uncertain.
“There are a lot of moving parts [in this legislation],” White said. “In regards to the coverage to people who are staying on their parents’ insurance until they are 26, I think the insurers ... will probably just put them under family coverage, in which case, I don’t think there will be an increase to the premium [families pay for insurance because] the family already has coverage.”
In addition, White said that the largest source of premium increases are rising health care costs, and the legislation has provisions that could cut future costs by reducing inefficiencies.
“Certainly, I don’t have any reason to believe that premiums are going to fall,” White said. “The multi-trillion dollar question in the long run is whether the health reforms will ultimately contribute towards the slowing down of cost growth. I definitely think we don’t know that.”
However, White noted that SHIP is relatively inexpensive for the coverage it offers, especially when compared to individual plans offered to older adults.
“Just to put it in perspective ... if [you were a full-time staff member and] you leave Cornell, the University will give you individual COBRA ... and that’s around $600 a month,” White said. “It’s expensive because most people who need COBRA are more expensive [to cover] ... but since the student body is, by and large, healthy, it gives the University leverage to negotiate competitive rates.”
According to the Office of Student Health Insurance, SHIP costs $1716 for students this year and covers most inpatient and outpatient care, on or off campus. It also covers mental health treatments, pre-existing conditions and medical emergencies when traveling abroad.
Due a decision by the Board of Trustees in 1974, the University is required to provide student health insurance. The type of insurance offered by Cornell is guided by the six Criteria for Adequate Health Insurance, which was established by the Student Insurance Advisory Committee, a group of graduate, undergraduate, administrative and Gannett representatives.
According to Dittman, SIAC annually reviews health care costs from Aetna, the current provider for SHIP, and audits these costs through Towers Watson, a third-party actuarial consulting company. Dittman said the University does not make any money from SHIP enrollment and all profits go to Aetna. Dittman added that Aetna’s target loss ratio is 80 percent, which means they aim to spend 80 percent of premiums on health care costs.
When asked about keeping premiums low and an investigation by New York State Attorney General Andrew Cuomo that exposed some student insurance loss ratios as low as 30 percent, Dittman said one cannot compare insurance plans between universities due to differences in coverage offered and costs involved.
“The Attorney General has really gone after the plans that don’t provide good coverage because they are very misleading,” Dittman said. “Robust plans like ours are good value for what they are. When somebody says, ‘My kid at this college pays so-and-so,’ they are comparing apples to oranges because their benefits are not comparable nor are the cost of health care in that area.”
Nonetheless, the University will allow SHIP policy holders to opt out beginning in January and Dittman said the application to opt out will be available “in the next couple of weeks.” said the application to opt out will be available “in the next couple of weeks.”
However, she cautioned students who are thinking about switching to consider the consequences.
“We have so many stories of people who have made the decisions to limit their cost by having an unacceptable health insurance plan and then suddenly they got a huge medical bill ... or they have to leave school in order to be treated at home,” Dittman said. “We are not in the business of selling [SHIP] ... If [students] have another option ... that’s great. Go for it. Cut your expenses. What we don’t want is to have people gamble around this ... or risk their education.”