AIP's Response to the Proposed Bill

April 10, 2011

Centers for Medicare and Medicaid Services
Department of Health and Human Services
Attention: CMS-9981-P
P. O. Box 8010
Baltimore, MD 21244-8010

Re: Proposed Rule 45 CFR Parts 144 and 147
CMS-9981-P
RIN 0950-AA20
Student Health Insurance Coverage

To Whom It May Concern:

My agency has specialized exclusively in the sale and administration of student health insurance policies since our Illinois incorporation in 1971.

The provisions of the Affordable Care Act, if applied to student health insurance coverage, will prevent many institutions of higher education from offering these plans.

Annual Limits. Guaranteed acceptance-student insurance programs have been sold for decades as supplemental insurance policies, and have been designed to coordinate with services provided at the college or university student health service. The rich benefit plans you are proposing would be priced considerably higher than most colleges and universities are prepared to charge, and are unaffordable for most college and university students who are already burdened with tuition and housing expenses. Student health insurance has long been the only affordable means of insurance protection for students.

Unlike group insurance coverage which is billed through payroll, or individual insurance coverage which is primarily sold through the Internet and where you can build a plan to fit your personal budget and which is rated based upon personal health history, most student plans are offered to the student on a guaranteed acceptance and strictly voluntary basis. In some instances premium is paid through tuition, but most times the student makes periodic payments throughout the year directly to the insurance carrier or administrator. Overall participation in these voluntary plans is generally less than 3% of the total enrollment at the school. Because of these participation factors, these voluntary student insurance plans cannot bear the burden of the benefit increases you are forcing upon them.

In our experience, when one school is given a choice of two separate benefit plans with a high and low benefit option, most students will select the lower benefit option, because the premium for the lower option is less, simply because the majority of students attending classes are healthy and interested in protecting themselves from a minor illness, a pregnancy, or an accident that may occur during the year.

Student health insurance plans provide an affordable alternative to individual policies which are always individually underwritten, most of which exclude maternity, or to employee policies which may be available to students (as a dependent to a parent or spouse's employee health insurance policy), but at a much higher cost than the premium charged for the student health insurance policy.

Coverage of Preventive Health Services. Until recent years, the student insurance policy's intent was to provide coverage for accident and illness occurring during the policy period. Elective preventive services other than those mandated had not been covered by the student insurance plan until recent years. Coverage for preventive services increase plan cost, and most preventive services are available affordably at the Student Health Service. Costs of the student insurance policy have already risen considerably in recent years because of mandated benefits required by many states, and provisions for Continuous Coverage enacted with HIPAA which remove limitations for pre-existing conditions.

Choice of Health Care Professional. The requirement of the Choice of Health Care Professional is not applicable to student health insurance policies. These policies do not require designation of a primary care provider. Students may receive treatment from the provider of their choice.

Medical Loss Ratio. An 80% loss ratio may appear adequate for small group or individual plans, and an 85% loss ratio may appear sufficient for large group plans, but because of the voluntary nature of the student insurance policies, which are mass marketed through the mail and internet using lists of eligible students provided by the educational institution, there are many more costs involved in the solicitation, enrollment, collection of premium, and general plan administration for these policies.

In addition, the insurance carrier takes much more risk on a student insurance policy, and the insurance carrier will take on an even greater risk once the limitations in these plans have been removed under this law. The voluntary nature of student insurance programs creates the immediate possibility of an insurance carrier providing limitless coverage without any guaranty to the insurance company of receiving the full annual premiums which should be paid.

At the present time, most of the student insurance policies are awarded to an insurance carrier only after a formal bid, with the plan design and eligibility requirements dictated by the educational institution. The competitive bidding process which has been in place for many years has always insured that students receive the highest level of benefits for the most affordable premium.

Student insurance policies have been filed under the blanket laws of every state because they are very different from group or individual health insurance products. They are truly a specialty product and should be treated as such.

Sincerely,

Terese M. Harkins
President