Daunted by steeply escalating prices for University-provided medical insurance plans, University Health Services is looking into whether students should be required to purchase an insurance plan, in part, as a way to lower the cost of these plans.

Jess Cox
Graphic by Ashley Dinges

Rising health insurance costs lead to what is known as the “death spiral” in the insurance business because only sick people feel the need to buy an insurance plan, said UHS Director Bob Winfield.

“When there aren’t enough healthy people buying the insurance to cover the cost of treating the sick, the price goes up,” he said.

The University health insurance plan offered to domestic students without any other coverage costs $1,998, up from $678 for the 1997 academic year.

The cost of the domestic plan started to rapidly increase in 2002, Winfield said. As the cost of the plan broke $1,000 because of new benefits and a poor economy, many students stopped buying it, leaving themselves uninsured.

While 3,500 students bought the domestic plan in 2001, UHS expects about 1,700 students to buy it this year.

Requiring students to purchase a University health insurance plan could help eliminate this problem and be helpful for sick, uninsured students that struggle to pay their medical bills.

The health insurance plan for international students serves as a case study for why requiring domestic students to purchase a health care plan may be a good idea.

The plan for international students costs nearly $1,000 less than the domestic plan even though there are only a few small differences in service between the two, said Karen Klever, student insurance manager for UHS.

The difference in price, she said, can be attributed to the fact that the international plan is mandatory for all international students. Healthy and unhealthy students alike must buy it, keeping the price down for everyone.

“If the University required that everyone be insured, the cost of the domestic plan would drop sharply,” she said.

Winfield said he thinks the University should consider requiring all students to have insurance. He said that in the past, uninsured students have had to refuse expensive but necessary treatment, while others were forced to quit school to pay medical bills. According to a 2003 study by the Kaiser Foundation – a nonprofit organization for public health research – people without insurance are about three times more likely to skip treatment or not fill a prescription.

“In spite of the cost, I believe it’s always prudent to be insured,” Winfield said.

About 25 percent of public universities with more than 10,000 students currently require that their students be insured, including Michigan State University, Ohio State University and the University of Minnesota, said Steven Beckley, a private health care management consultant.

But not all universities want mandatory health insurance, Beckley said. Some schools have phased out their university-run medical insurance plans, he said, because they decided students could find a better value and quality of service elsewhere.

“There are also fears that requiring insurance will adversely affect the most at-risk students and make it even more financially difficult for them to attend college,” Beckley added.

According to last year’s U.S. Census, 19 percent of American college students are currently uninsured. But that figure does not include students above the age of 24, who are no longer eligible for insurance provided by their parents’ employers. The actual figure is closer to 30 percent, Beckley said.

The percentage of uninsured students at the University is unusually low, said Beckley. According to a UHS survey conducted in April 2000, only 3 percent of undergraduate students and 3 to 7 percent of graduate students do not have health insurance.

UHS recently finished another survey of all three University campuses, Winfield said.

The survey was intended to gather statistics on the number of students without insurance and how they would feel about being required to buy it from the University. Survey results have not yet been released, but Winfield said UHS will take them into account when deciding what stance to recommend to the administration.

Winfield added that regardless of whatever changes UHS eventually decides to propose, any concrete action would take at least two or three years.

“I’m not even sure I’m going to support it yet,” he said.

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