College health insurance is about to get a lot more expensive

The Patient Protection and Affordable Care Act (PPACA) is having an impact on nearly every corner of the health care market. Student health plans for college students are no exception. Premiums may rise by a factor of 5 or 10, from a couple or few hundreds of dollars per year to a couple thousand. About 7 percent of college students age 18 to 23 buy these plans, and I’m sure they won’t be happy when it comes time to write the next check.

But they might be happy if they actually get sick. That’s because a lot of the college plans –which look like real insurance– are just limited policies with benefit caps in the $10,000 range. As a Health and Human Services official tells the Wall Street Journal, that’s not even enough to cover the first day in the hospital. The Affordable Care Act requires plans to offer at least $100,000 in coverage.

I support this aspect of the law. College students definitely should have catastrophic coverage; they are young and tend to be healthy, so the cost of coverage can be very reasonable compared to the potential payout. It’s the classic case for having insurance: to protect against the small chance of a big problem. Colleges are supposed to be in the education business, so maybe they can use the new rules and fees as a teachable moment.

June 4, 2012

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