Health insurance is boring until it isn’t. This was the sentiment expressed at a weekly Undergraduate Students Association Council meeting in early February. This statement symbolizes the new fight brewing over the University of California’s Student Health Insurance Plan, which is now more than $57 million in debt.
Late last year, the UC Office of the President reported to the 10 University of California campuses that over a three-year period UC SHIP has operated at a total net loss of $57.41 million.
In a presentation to USAC, Scott Arno, a UCLA Student Health Advisory Committee representative, said the debt was a result of failures on the part of the University and their private consultants, who set premiums too low to support the program’s cost.
The burden now falls on the UCOP to fix UC SHIP. But while it seeks out solutions to the shortfall, the Office of the President should work to pay down the debt without piling the burden on students.
UC SHIP is what health care professionals refer to as a “self-funded plan.” The UC collects student fees, called premiums, from each campus and compiles them all into one big pot of money. As services are utilized on each campus, money is drained from the pot to pay for that student’s health care cost.
This reduces out-of-pocket costs for students. Since the pot contains so much money, it limits the amount paid up front at the doctor‘s office, such as co-pays and deductibles. For the first couple of years, it provided a great value for those enrolled.
However, according to Arno, members of the UCLA Student Health Advisory Committee began to think that UC SHIP was too good to be true.
These groups believed premium costs were too low given the extent of benefits students received.
In addition to its sizable deficit, the system now finds itself operating at a loss, according to University documents.
Despite a number of proposals on the table, no long-term answer beyond the next couple of years seems completely soluble.
Peter Taylor, UCOP chief financial officer, said that when asked by student groups how much premiums would have to be raised in order to allow UC SHIP to be self-sufficient next year, his department gave a tentative estimate of 20 percent.
However, if it is inevitable that premiums should rise, they should only rise at a rate that solves the operational deficit. As for the $57 million debt already accumulated, it would be wrong for the University to use premium hikes in order to pay that debt down.
Multi-year increases would shift the burden from students who have already used the services to new, incoming students, sending the signal that the University considers it a practical exercise to finance its mistakes with students’ money.
If a 20 percent increase reflects the true cost of breaking even, then the hike is justified.
Even with the increase, Arno said he expects UC SHIP to be a better value than other insurance plans, including UCLA’s old plan, which was restricted to just the school.
With student money off-limits, the Office of the President could look to importing revenue streams from several different sources including portions of medical center profits and revenue gained from research patents, some of which already goes to the UCOP.
Another option is to use part of the $256 million Governor Jerry Brown said he would try to inject into the UC’s general fund.
Assuming that UC SHIP remains competitive with alternative insurance plans, it is in students’ best interest to pay more to prevent the system from incurring more losses. They should not, however, tolerate paying more than is necessary to resolve a debt that is not their fault.
To ensure that students do not subsidize the administration’s mistakes, students should make sure administrators both on campus and in Oakland know where they stand.
The actions we take now will set a precedent for the University’s future relationship with its students.
This article says that the debt incurred by the UC SHIP program “was a result of failures on the part of the University and
their private consultants, who set premiums too low to support the
program’s cost.” In other words, the program has been undercharging students for their premiums. Now, in order to fix this, adminstrators want to raise premiums. How again is this protest-worthy?
I understand the concept that future students will probably be more affected by increased premiums than the original students who benefitted from the too-low premiums. That might not be fair, but the higher premiums that future students pay will be partially offset by the advantage of having UC SHIP continue to exist as an attractive alternative to other insurance plans.