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:• 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.

Contrast the voluntary consortium process with the state/system–wide mandated consortium process of other university systems.

PPACA Coverage Requirements

• 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 pre-exclusions, minimum essential benefits package; mental health parity

What will this do to premiums?• 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-’13For ‘13-’14For ‘14-’15

as students could stay on their parents plan.

What are underwriting trends now?

• 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* 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

Risk/Profit:Risk charge Margin for cost fluctuationProfit

* (according to AON/Hewitt)

Group Purchasing Eliminates/Decreases Premium Cost Components 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: 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

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: 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:

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

Seven schools attended the vendor semi – finalist presentations

Six schools remained in the consortium Two more schools have expressed interest in re-

joining the group, either this year or next

Unexpected pitfalls:

Fewer schools participated than we originally thought would

Plan design ended up changing from original RFP

Final Plan DesignHigh Plan Option $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 $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)