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NY AG: Health Insurers Offering Expensive, Inferior Coverage to College Students

John Commins, for HealthLeaders Media, April 8, 2010

Health insurance plans that colleges, universities, and trade schools endorse or mandate for students cost too much for the coverage provided, and are running afoul of federal protections recently signed into law, according to a report released today by the New York Attorney General's Office.

"Many of the sponsored healthcare plans looked at during our investigation leave students at risk while providing massive profits for insurance companies," Attorney General Andrew M. Cuomo said in a media release. "It is important for students to have adequate healthcare coverage to protect themselves during times of illness or injury, but a bad health insurance plan can have catastrophic and long-lasting effects on a young person's life."

In a letter to more than 300 colleges, universities, professional schools, and trade schools, Cuomo urged schools to review their student health insurance plans and fix problems that add needless costs and put students at risk. The letter was sent to schools in New York and about 30 out-of-state schools nationwide that are attended by New York residents.

Cuomo's letter also noted that students who purchase insurance are a generally healthy population, so schools can bargain with health plans to provide sufficient, fairly-priced coverage.

"By being informed of the problematic practices that currently exist in the industry, schools can negotiate for better health plans, and students and their families can be better equipped to select the coverage that is best for them," Cuomo said.

The AGs report said that the school-sponsored student health insurance industry generates more than $1 billion in revenue each year, and provides coverage for about one million college students nationwide. The students pay annual premiums that can range from $100 to more than $2,500.

More than two-thirds of private colleges and universities and almost one-quarter of public colleges and universities require their students to either purchase the school-sponsored plan or have their own "comparable" health insurance.

The AG's report found that many school-sponsored student health plans have limits and exclusions that put students and their families at risk of facing catastrophic costs for medical care. Some plans have exclusions for pre-existing conditions, leaving many students with such conditions completely uncovered for any related treatments.

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