THE HOW & WHYS OF PUTTING
TOGETHER A VOLUNATRY STUDENT
HEALTH INSURANCE CONSORTIUM
TUESDAY MAY 29,2012 3:45PM
AFTER THIS SESSION ATTENDEES
SHOULD BE ABLE TO:
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Identify the benefits & pitfalls of voluntary
consortium purchasing of student health insurance
benefit plans (SHIBPs).
Compare fully insured SHIBP designs that are
complaint with the health care reform act (ACA)
requirements & tailored to student needs.
Discuss the consortium process used to get 10
different universities to voluntarily agree to fund &
participate in group purchasing for student health
insurance.
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Contrast the voluntary consortium process with the
state/system–wide mandated consortium process of
other university systems.
PPACA Coverage Requirements
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SHIBP’s are considered “individual health insurance
policies”. Up to 26, can be on parent’s insurance.
2012-13 - $100,000 minimum level of coverage, no
internal limits, preventive coverage at 100%
2013-14 – changed to $500,000 minimum level of
coverage
2014-15 –unlimited level of coverage, no preexclusions, minimum essential benefits package;
mental health parity
What will this do to premiums?
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They will go up
22.7% rate increase
35.8% rate increase
43.2% rate increase
3-5% decrease enrollment
Medical trend 10-12%
For ‘12-’13
For ‘13-’14
For ‘14-’15
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as students could stay on
their parents plan.
What are underwriting trends now?
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Some carriers are leaving the market
Higher premium & enrollment levels are being
required by carriers to quote
Moving to a standard plan design
Higher deductibles
Decreased interest in quoting voluntary plans
More conservative underwriting
Possibly expanding eligibility to include online credit
students
Components of Health Care Premiums*
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Cost of Claims:
 Paid claims
 IBNR reserve
 Large claim pool (pooling cost; forgiven claims)
Administration:
 Claim adjudication
 Communication
 Commissions
 Premium taxes
 Management fees
 Other administration
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Risk/Profit:
 Risk charge
 Margin for cost fluctuation
 Profit
* (according to AON/Hewitt)
Group Purchasing
Eliminates/Decreases Premium Cost
Components
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Eliminates – Commissions
Reduces – IBNR reserve, premium taxes, margin for
fluctuation, management fees, claims administration
fees
Shares – Risk charge, margin for cost fluctuation,
IBNR reserve, large claim risk, communications,
other administration costs
Why Universities Care About Health
Insurance for Students. We care
because its important to:
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Provide “best in market” services to students & their
dependents
Have the insurance be a financial safety net to keep
students in school
Support the culture of health & wellness. Healthy
students do better in school
Enhance the message of caring about students
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Recruit graduate students in a competitive market
Become the first call for mental illness or chemical
addiction
Recover some cost of the Student Health Service
Comparison to state/system wide
mandated group purchasing:
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The Health Connector - purchased insurance for the
public university students in MA
University of California system – mandated from the
top down (president of the system)
Our Voluntary Consortium Experience:
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First formed a consortium to explore if group
purchasing of SHIBP was feasible.
Hired a consultant to work with the 14 schools
No two schools had the same benefits
Agreed that group purchasing could save students
money
Ten schools remained committed to phase 2 –
preparing the RFP and going out to bid
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Seven schools attended the vendor semi – finalist
presentations
Six schools remained in the consortium
Two more schools have expressed interest in rejoining the group, either this year or next
Unexpected pitfalls:
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Fewer schools participated than we originally
thought would
Plan design ended up changing from original RFP
Final Plan Design
High Plan Option
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$2.5 million max coverage
OOP max $1500
80/20 coverage in network
100% coverage in SHS w/$5
generic drug co-pay
$35 OV & UC co-pay
$125 ER co-pay, waived if
admitted
$1724 annual premium
(w/out university fees)
Low Plan Option
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$1 million max coverage
OOP max $3500
80/20 coverage in network
100% coverage in SHS w/ $5
generic drug co-pay
$40 OV & $50 UC co-pay
$150 ER co-pay, waived if
admitted
$1604 annual premium
(w/out university fees)
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