NY AG: Health Insurers Offering Expensive, Inferior Coverage to College Students

John Commins, for HealthLeaders Media , April 8, 2010

Some plans require students with pre-existing conditions that are not covered to purchase the plan at its full price. Many plans also have extremely low coverage limits. For example, some plans cap all coverage at less than $25,000, while others have per-illness caps of as low as $700. Additionally, many plans either fail to include prescription drug coverage or limit such coverage to an inadequate level.

In addition to providing limited coverage, the AG's investigation found that many school-sponsored plans are unnecessarily costly. In many cases, the amount of claims paid out by the insurance company is only a fraction of the premiums students pay, resulting in excessive profits for the insurance companies, according to the AG.

Cuomo's office issued subpoenas to some of the nation's largest insurers of students, including Aetna Inc.; UnitedHealthcare Insurance Co.; Gerber Life Insurance Co.; Markel Insurance Co.; Beech Street Corp.; United States Fire Insurance Co.; Combined Life Insurance Co. of New York; National Union Fire Insurance Co. of Pittsburgh, PA; Security Mutual Life Insurance Co. of NY; and Commercial Travelers Mutual Insurance Co..

In response, UnitedHealthcare said, "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 healthcare services."

Robert Zirkelbach, spokesman for America's Health Insurance Plans, says college health plans aren't like the regular commercial market.

"First of all, colleges and universities have a great deal of flexibility in determining the type of insurance they are going to offer students," he says. "These are highly customized to meet the unique and varying needs of colleges and are oftentimes designed to compliment existing health resources on campuses such as health clinics. The insurance is supplementing what is already being provided to students."

Zirkelbach says premiums for student coverage are "quite affordable," especially considering the cost structure associated with the coverage.

"There is a lot of turnover, they are highly customized, and they have higher structural costs than other insurance products," he says.

The AG also issued subpoenas to insurance brokers, agents, and consultants, including University Health Plans, Inc.; Niagara National Inc.; Haylor, Freyer & Coon, Inc.; The Bailey Agencies; and Mercer Health & Benefits LLC.

James C. Turner, MD, president of the American College Health Association, says he isn't surprised by the AG's findings, because his organization has been pointing out the shortcomings of many college health insurance plans for years.

Turner, an internist who is also the director of the Department of Student Health at the University of Virginia, said the AG's letter to college presidents borrows heavily from the ACHA's recommendations that were issued in 2008.

John Commins is a senior editor with HealthLeaders Media.

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