Guest Columnist: A rock and a hard place -- the debate over insurance

As health insurance costs rapidly escalate across the nation, Penn has joined hundreds of universities in confronting the stark challenge of navigating between the rock of drastically escalating insurance carrier premiums and the hard place of diminished benefits for students.

Over these past weeks, I have had the opportunity to talk with a number of Penn graduate, professional and undergraduate students about this year's student health insurance plan. Our conversations have been exceptionally candid. Indeed, I have been deeply moved by the passion and eloquence of those students who have chosen to share their personal stories during our two recent health insurance information sessions and in subsequent conversations.

This year, as has been previously reported, Penn students would have faced an 80 percent increase in health insurance premiums if benefit coverage levels had remained the same as in the prior year. This situation would have led to minimum premiums of $1,800 annually for individual coverage, up from $997 in academic year 2000-2001. The University's Student Health Insurance Advisory Committee felt that this rate of increase was clearly unacceptable as a single-year increase.

Rather, the proposal adopted by SHIAC resulted in a rate increase of roughly 35 percent and a plan that attempted to provide some protection against student, and family, catastrophic loss.

Penn's 2001-2002 health insurance plan was developed after extensive negotiations between insurance carriers and the Student Health Insurance Advisory Committee. SHIAC was formed four years ago at the request of graduate and professional students who wanted to actively participate in the selection of the student insurance plan. SHIAC membership for the past year included six graduate and professional students and two undergraduates, in addition to faculty and staff. This committee annually serves in an advisory capacity, reviews the proposals for the plan and works with insurance carriers to develop and negotiate premium and benefit designs. The committee then provides the provost and the president with its recommendations.

SHIAC was successful in markedly limiting the rate of increase proposed by the carrier for individuals. Indeed, the plan that has resulted for this academic year represents an effort to balance the real and legitimately conflicting interests of our students -- some of whom seek maximum benefits, others of whom seek minimum premiums -- recognizing that this would necessitate a lower level of benefits.

During our recent information sessions, specific questions were raised about the plan design, the carrier selection process, the effect of the rate increase on "out-of-pocket" expenses, care for students with chronic illnesses and costs for prescription medicine. We heard, from SHIAC committee members, that one of the most important factors that the insurance carriers weigh in calculating rate increases and benefit designs was the amount paid out for medical claims in previous years.

Over the past three years, the amount paid out by Penn Student Insurance Plan carriers has been extremely high. In fact, the carriers paid out far more in claims than they collected in premiums, which led them to incur significant losses on their Penn plans. Therefore, all carrier proposals raised premiums dramatically. It is clear that the cost of health care continues to present immense and unsolved problems for individuals as well as institutions.

In order to provide expanded service to the Penn student community, SHIAC helped negotiate some additional supports. Students' share for prescriptions will be 30 percent of a negotiated discounted cost for generic medications and 40 percent of a discounted cost for brand name prescriptions. The carrier has informed plan participants that these negotiated costs will be significantly discounted from manufacturers' recommended retail prices.

The Student Health Service has also increased its clinical provider staff to the equivalent of 12 1/2 providers, which has benchmarked favorably against peer institutions and the American College Health Association's standards. SHS has already developed and implemented plans to increase its staffing in additional areas to meet the evidenced needs of students. Also, 100 percent of the costs for lab tests performed on-site at Student Health will be covered.

Shortly, SHIAC will begin the work of selecting a carrier and/or carriers for next year's (2002-2003) student health insurance plan. If you have any suggestions or ideas that you wish to forward to the members of SHIAC, please send them to shiac@pobox.upenn.edu.

I have already forwarded the details of the recommendations that I have received regarding the plan to SHIAC, for their consideration when they begin the very difficult carrier review and selection process. We welcome your continued input as we confront one of the most complex, and challenging issues confronting our University, and indeed, our country.

Please note All comments are eligible for publication in The Daily Pennsylvanian.