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THE HOW & WHYS OF PUTTING TOGETHER A VOLUNATRY STUDENT HEALTH INSURANCE CONSORTIUM

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).

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THE HOW & WHYS OF PUTTING TOGETHER A VOLUNATRY STUDENT HEALTH INSURANCE CONSORTIUM

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  1. THE HOW & WHYS OF PUTTING TOGETHER A VOLUNATRY STUDENT HEALTH INSURANCE CONSORTIUM TUESDAY MAY 29,2012 3:45PM

  2. 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.

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

  4. 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

  5. What will this do to premiums? • Medical trend 10-12% For ‘12-’13 For ‘13-’14 For ‘14-’15 as students could stay on their parents plan. • They will go up • 22.7% rate increase • 35.8% rate increase • 43.2% rate increase 3-5% decrease enrollment

  6. 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

  7. 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

  8. Risk/Profit: • Risk charge • Margin for cost fluctuation • Profit * (according to AON/Hewitt)

  9. 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

  10. 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

  11. 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

  12. 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)

  13. 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

  14. 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

  15. Unexpected pitfalls: Fewer schools participated than we originally thought would Plan design ended up changing from original RFP

  16. Final Plan Design High Plan Option 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) • $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)

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