Dispute over Obama’s health care law has implications for U student insurance

The University has mandated health insurance for students for more than 20 years.

Dispute over Obama’s health care law has implications for U student insurance

Dina Elrashidy

 

Since it became law in 2010, President Barack Obama’s Patient Protection and Affordable Care Act has been a focal point of powerful and partisan debate.

Last week, that dispute made its way to the U.S. Supreme Court for three days of tense oral arguments. The court is expected to make its decision in June.

The act’s most disputed provisions wouldn’t take effect until 2014, the most controversial of which is a mandate on virtually all Americans to have health insurance. Justices met privately Friday to vote on the case, but no one will know the outcome until the summer.

University of Minnesota health experts have watched the events closely and have already taken steps to shape the student health plan to meet national standards that may be in jeopardy. The University’s health insurance plans are currently in line to meet the federal mandate that is being disputed at the Supreme Court.

No matter the outcome, the University will continue its plans of meeting the new standards.

Next year, students will be expected to submit a waiver to show proof of insurance instead of just the name and number of their provider. This will simply require students to contact their insurance company for proof.

The change is meant to ensure students are covered. Seven to 10 percent of students slip through the cracks uninsured, said Student Health Advisory Committee co-Chair Michelle Volz.

The requirement is really “a safety net for students so they do not have their academics derailed because of health issues,” said Ferdinand Schlapper, director of Boynton Health Service.

The University’s insurance mandate has been in place for more than 20 years. Schlapper said it keeps costs down. Students currently pay $1,900 per year for University insurance.

And because there’s no middle man like with companies that use insurance providers that take a profit, the University pays out 98 percent of its premiums to health services, Schlapper said.

“If there’s no mandate, if it’s voluntary, it never works on a campus,” Schlapper said.

Looking at the University-mandated programs versus voluntary programs can give insight to the national argument, he said.

According to a 2008 report from the American College Health Association, 38 percent of public colleges in the U.S. mandate health insurance. Schlapper said between 30 to 50 percent of universities have health insurance mandates, with more schools moving toward requirements.

Schlapper said schools with voluntary programs are seeing a rise of about 10 to 20 percent in costs for their health plans. The University’s health insurance price for students will not increase next year.

What happens with voluntary programs is what Schlapper called a “death spiral.” Only those who know they will use insurance purchase it. Thus, costs get higher with few students paying for it.

The same problem exists on the national level.

The average American family pays about $1,000 in insurance premiums annually to subsidize the uninsured, according to a 2009 study by Families USA, a group that lobbies for health care. But others have been skeptical of that claim.

“The basic argument is that unless there is such a mandate, it will be impossible to come up with a health insurance price that is affordable to everyone,” said Robert Kane, a health policy professor at the University. “The whole point of insurance is to spread risk.”

However, the question is whether the requirement that virtually every American have insurance or pay a penalty “is a step beyond what our cases allow,” Supreme Court Justice Anthony Kennedy said during Supreme Court arguments Tuesday.

“We have the highest costs, our system is broken, and we need to figure out some way to fix that.” Schlapper said. “It’s really become a partisan battle. It’s [an] unfortunate battle.”

The court is split between conservatives and liberals, and one swing vote could mean the difference between the law being struck down and it staying in place.

“All the experts watching this are divided as to how this will turn out,” Schlapper said. “It’s not really popular because people really like free choice. Unfortunately, we’re all paying for that.”

The Medicaid question

The law also aims to expand coverage of Medicaid to approximately 15 million low-income people who currently earn too much to qualify. The federal government would pay almost all the costs under this provision, but states that refuse the expansion face the possibility of losing all Medicaid funding, on which many states are dependent.

The court considered arguments from 26 states disputing the Medicaid expansion.

States against the change claim that it is unconstitutional because their dependence on federal aid for Medicaid coerces them to accept the change or face the loss of all its funds. Kane said the disputing states are also concerned about the financial burden they’d face after the full federal coverage is weaned down.

In the plan for Medicaid expansion, states would receive 100 percent federal funding for the first three years to support the expansion, but that would gradually decrease to 90 percent in following years.

“Why is a big gift from the federal government a matter of coercion?” Justice Elena Kagan asked during Supreme Court arguments Wednesday.

Liberal justices said they would uphold the Medicaid expansion.

Conservative justices appeared open to the states’ argument that the Medicaid provision is unconstitutionally coercive.

There is precedent for the federal government to offer states opportunities and incentives to participate in programs like this, Kane said.

“If you want to play, you can. You don’t have to. If you choose not to, they may lose participation on Medicaid,” Kane said.

 

—The Associated Press contributed to this report