14 May 2008

Colleges not covering students

One of the givens for college used to be health coverage. No more. Business Week has an article on health care falling apart for college kids as well -- probably the healthiest demographic there is. "Is your kid covered?" notes that insurance companies make big profits here, but leave some families with big bills. Those would be the families whose kids get sick.

If for-profit insurance can't even cover college kids it's worse than worthless.
More than half of the insurance plans recommended by colleges offer benefits of $30,000 or less, according to a survey published in March by the General Accounting Office, an arm of Congress. Many plans have further limits that prevent payout of even modest maximums...

The vigorous health of most college students helps make insuring them a lucrative niche, according to industry consultants. Most insurance companies, even if publicly traded, don't break out separate financial results for their student-oriented policies. But some schools disclose an indication of the profitability of policies sold to their students: the so-called benefits ratio. This shows the percentage of premiums returned to customers in the form of benefit payouts. Large health insurers typically have overall ratios of about 80%, meaning 20% of premiums goes to profits and administrative costs.

In several cases where BusinessWeek (MHP) was able to obtain benefits ratios from colleges or universities, the percentage was well below 70%. Anything below 75% ought to be grounds to negotiate a better deal, according to Eric Engstrom, president of Keeling & Associates, a consulting firm in New York.

At Palm Beach Community College, the benefits ratio for the spring semester of 2008 was 42.6%, according to reports provided to the school by UnitedHealthcare.

In previous semesters the benefits ratios dipped as low as 10.2% and 13.8%. This means the college's plan has been a veritable gold mine for UnitedHealthcare. At the University of South Florida in Tampa, which offers a plan from American Fidelity Assurance, the ratio this academic year is 35%, down from 71% and 61% the previous two years, respectively.
Did you get that? UnitedHealthcare paid out as low as 10.2% in benefits some semesters. Compare that to 97% for Medicare or Canada's universal health care plan (also called Medicare).

Now here's the key to change. Upon finishing that article in Business Week, do most readers:

a) Look into healthcare to find out for themselves what's wrong with our so-called system,

b) Protect their own kids by ensuring that Max and Jessica are still fully covered under dad's plan, or

c) Call their broker and invest in UnitedHealthcare.

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