NAICU Washington Update

HHS Issues Final Regs in Response to Concerns about Student Health Insurance Costs

March 12, 2013

The higher education community expressed concerns late last year that new market rules under the Patient Protection and Affordable Care Act (ACA) would significantly raise student health insurance premiums. The Department of Health and Human Services (HHS) responded to these concerns on February 25, with final regulations that reflect the issues raised, and should lessen anticipated premium increases. 

The December 2012 letter drafted by ACE and co-signed by NAICU and others in the education community  asserted that if student health insurance plans were priced and rated in large individual market risk pools – as was initially proposed in the HHS draft regulations – a substantial increase in the premiums for those plans would result.

The community’s letter maintained that such extra costs could undermine the ability of some colleges and universities to continue offering affordable coverage, and asked HHS to revise its proposed regulations to permit separate risk pooling and experience rating for student health insurance coverage based on the eligible campus population of students and their dependents, rather than on the much larger individual market risk pool. The final regulations issued by HHS reflect that change, allowing student health plans to be considered in market risk pools with other similar types of plans.

Although the HHS change should reduce the amount that premiums will rise for student health plans, those plans will still face cost increases under the ACA’s market rules. It remains unclear whether the revised regulatory approach will generate sufficient savings to lead those colleges and universities contemplating the discontinuation of their student health insurance plans due to increased costs to reconsider their decisions.

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