The American Interest
Analysis by Walter Russell Mead & Staff
Obamacare Killing Affordable Student Insurance

With summer vacation upon them, students probably aren’t thinking much about their health insurance at the moment, but when they go back to school in August they may be in for a nasty surprise. Many schools are discontinuing affordable student insurance programs, citing new Obamacare regulations that would render these programs prohibitively expensive.

The Wall Street Journal provides an example:

Bethany College in Lindsborg, Kan., this past year offered a 12-month plan that cost students $445, while capping payouts at $10,000. For the 2012-13 academic year, the Obama administration said the payout cap must be at least $100,000. Bethany said students would have had to pay more than $2,000 to get that new level of coverage.

“We decided not to offer coverage for our students next year given the proposed increase in premium,” said Bob Schmoll, Bethany’s vice president for finance.

This is only one school, but colleges around the country are beginning to make similar decisions. The Jounal estimates that 60 percent of American colleges have plans that will be affected by the new requirements; many, if not all, will choose to cancel their insurance programs entirely. The Obama administration defends this as a protection against poor quality healthcare plans, but it’s hard to see how this benefits the students who will no longer have an affordable health insurance option.

We seem to remember that advocates of Obamacare told us that Americans who were happy with their current health insurance wouldn’t face any changes under the new law. Apparently, that wasn’t true.

One of the problems with the American health care system is the ability of lobbies to persuade Congress and state legislators to mandate coverage for their own pet causes or diseases. Chiropractors, acupuncturists, psychologists, drug companies: everyone wants to be included in mandatory coverage.

Unfortunately, every year special interests will find ways to hook new mandates onto the insurance requirements, and every year the cost of coverage will inexorably rise.

At one level there is nothing wrong with this; the more coverage for consumers, the better. But there’s the question of cost. If all insurance plans have to be gold-plated, full-service — and pre-existing conditions have to be covered — then health insurance is going to be unaffordable for many and perhaps most people. Young people in particular need low cost options; their incomes are low and their health risks are less so for some students choosing a cheap plan with limited coverage makes sense.

Students probably won’t be the only ones to face nasty surprises from the new system as time goes on. Although Obamacare was passed more than three years ago now, most of its provisions still have not taken effect. The public is slowly becoming aware of “minor” provisions hidden deep within the 2,700 page bill that are turning out to have a major impact on their lives. In many cases, people haven’t liked what they’ve seen; contrary to the predictions of supporters, public support for the bill has actually dropped in the years since its passage.

Published on June 4, 2012 12:00 pm
  • thibaud

    The absurdity of the current system’s core feature – linking insurance to an employer or school – is becoming obvious.

    As is the inescapable conclusion that the logical replacement for the current mess entails removing this burden and expanding the risk pool to the maximum via the public option, topped up by private insurance plans purchasable nationwide.

    Obamacare is bringing universal health insurance closer and closer.

  • http://www.everymanblog.com Everyman

    Why not call the spade a spade (at the risk of opening myself up to charges of racism, although my thoughts, shared here, have nothing to do with race). The president has made no secret of the fact that he, and his followers, want a single-payer system, one insurer – the government – and no other. And so the game is to price everyone else out of the business by artificially making their products unaffordable, while at the same time posing as the consumers’ advocate for better coverage. Win-win for the state; lose-lose for the citizenry, for the beneficiaries of government – and government only – healthcare. Is here some reason not to point that out, professor?

  • Bart Hall (Kansas, USA)

    Such cancellations are a feature, not a bug. Obamacare has had as its chief goal — from the beginning — the elimination of private insurance altogether, primarily by forcing rates higher through the obligatory addition of services, elimination of high-deductibles, guaranteed-issue provisions, and phase-out of Medicare Part C.

    The intent has ALWAYS been that premiums rise high enough that companies, schools, and individuals will drop coverage in order to pay a much lower penalty-tax, leaving the field to a single-payer, staffed by SEIU types, with waivers easily available to Obama’s political allies.

  • Emerson

    Leftists brush all this off thinking once Obamacare is fully implemented everything will be free and immediately available to them.

  • thibaud

    @2 – Wrong. THe public option is a HUGE win-win for the citizenry.

    Also a win-win for US employers, large and small.

    Win-win for entrepreneurs and would-be entrepreneurs who can’t leave a big company because they won’t be able to get decent, affordable health insurance on their own.

    Win-win for millions of unemployed Americans whom potential large employers can’t hire because they have to pay absurdly high health insurance premiums for them.

    Win-win for millions with that ridiculous, made-up stigma of a “re-existing condition.”

    But a huge loss for the private for-profit health insurance mafia and their protectors across the US political class.

  • Anthony

    Health care in America is a growing non-system of immense size and scope. The problem of interests has captured health care infrastructure and both students and general public pay. Employer provided health care coverage is heavily subsidized because it is tax-deductible – so its not just Obamacare skewing healthcare delivery.

  • Jim.

    Why are people complaining? $2000/mo is what young and healthy people need to be paying, to support their elders in their declining years.

    Just give them more student loan money to help them cover the costs, right?

    [/sarc]

    The title of this piece should be, “ObamaCare Leads the Charge in the War on the Young; Students Have Even More Reason to Regret Supporting Him”

  • Harry Allan

    The Bethany numbers look odd. I’d need to know more to advance a professional opinion (I’m an actuary), but they don’t smell right and need a closer look.

  • David Bowman

    Some of you have finally started catching on to what is happening. The entire idea, simply put, is to price health insurance completely out of the market and increase the public outcry for “Free” healthcare.

  • http://Gaboworld.blogspot.com Gabo

    You don’t mention the positive side. I had a pre existing condition according to my insurance company and was denied coverage. In the hospital I racked up a 40000 dollar bill. My new insurance said I was pre existing. So I was in trouble. But Obama care is already helping people with pre existing conditions – called bridge plan. In new York that is run through GHI. I applied. It was easy and now have even better coverage for a cheaper rate than before. Its 421 a month rather than 550. And it’s stellar. Look it up. It a savior. And the only coverage anybody would give me. Write about that Walter.