A pilot program now underway in New York State will allow large universities to self-fund student health plans, with the goal of providing health coverage to students at a lower cost.
The program is the result of legislation that New York Gov. Andrew Cuomo signed into law last month. The four universities that are eligible to self-insure are Columbia University, Cornell University, New York University, and the University of Rochester.
“This program makes it possible for a group of large universities to provide comprehensive health insurance to their students at a reasonable cost,” Gov. Cuomo announced last week.
“Many colleges require students to have health insurance so that they are protected in case of illness or injury. While many students are covered by their parents’ health insurance, other students have to purchase coverage, which can be a burden for families already dealing with tuition and other costs. Allowing the schools themselves to offer health plans lowers the cost, while ensuring that students get the health coverage they need.”Benjamin Lawsky, superintendent of the New York State Department of Financial Services, explained that by working with the universities, the state came up with a creative solution that allows the universities to self-insure, providing better value health coverage to their students.
“Effectively, this bill creates a demonstration project that could eventually be extended to other colleges and more students,” Superintendent Lawsky said.
New York State insurance law does not permit a New York institution to self-fund a student health plan without a license to do business as an insurance company. As a result, an institution must purchase a policy from an insurer, or incur the costs of becoming a licensed insurance company.
A group of large universities approached the Department of Financial Services to explore how to make comprehensive insurance available to their students directly in order to make the coverage more affordable by reducing administrative and risk costs. Working together, department officials and the schools developed the bill. It permits self-funding of health plans by universities with strong endowments because they have the ability to provide financial security to such health plans.
“Once we have experience with these large financially-strong institutions, we can consider whether the model will work for other universities,” Lawsky said.
Superintendent Lawsky and his department will have regulatory oversight over the student health plans. To protect students, the universities will set up reserves to ensure funding will be available to pay health care claims, according to the department.
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