The search for insurance

One student’s ordeal After suffering a recent car accident and winding up in the emergency room with three broken ribs, student Jason Chmielewski was disappointed to learn that his student insurance is likely to pay only $20 toward his hospital visit and a limited portion of his x-rays. Chmielewski had hesitated to go to the hospital after his accident because he was unsure of his insurance coverage, but the pain was eventually bad enough that he did go in and says that he “just figured school would cover it.” He later headed to campus with a handful of prescriptions and impending bills to learn about his insurance, but then discovered his insurance plan would not cover most of his bills because he only had the basic plan. Chmielewski did not have the extended plan, which costs $226 per term, nor was he even aware of it or student health services prior to his accident. “All I do is concentrate on my major,” he said. “I didn’t know about all this stuff here.” Ziegler said that many students who contact her are unaware of the extended plan. According to the PSU accounts receivables office, 13,264 students were on the basic plan last term, but just 955 students purchased the extended plan.

Providing student health insurance at Portland State has been a losing venture for insurance providers over the past few years, causing the university’s options for insurance to dwindle and the cost of plans to rise.

Insurance companies have had “very bad experiences” with PSU in the past, said Mary Beth Collins, interim director of Student Health and Counseling. The amount of money collected in premiums has been much less than what has been paid out in claims.

Ideally, Collins said, insurance companies need to pay out in claims about 60 or 70 percent of what they collect in premiums in order to sustain themselves and make a profit.

A 100 percent pay out in claims means the insurance company breaks even.

During the 2002-2003 school year, PSU’s contracted insurance company, Guaranteed Trust Life (GTL), paid out at 228 percent; in the 2003-2004 school year, GTL paid out 162 percent of claims.

“They lost a lot of money on us,” Collins said.

The company lost $929,172 in 2002-2003 and $434,903 in 2003-2004 to be exact, for a total loss of $1,364,075 over the two year contract.

A contributing factor to GTL’s sustained loss was that they signed an automatic renewal clause with their initial contract, keeping it active for two years with the initial low premium rate of $15. This was great for PSU, but not for the insurance company. When the contract ended in 2004, GTL did not want to renew with PSU.

It was clear by their $60 premium request, Collins said, that “they weren’t interested in doing business with us.”

Because of GTL’s loss of money, it was difficult for PSU to attract offers from the other 15 or so insurance companies in the nation that write student insurance.

“Very few companies would look at us,” Collins said. They wanted double for the premiums. 

Should you purchase the extended plan? Students who answer yes to the following questions may want to consider PSU’s extended insurance plan. Today is the last day to purchase extended coverage for spring term. Do you have full health insurance from another provider? Chronic illness? Family medical history (Does cancer run in your family?) Family planning (Are you planning on having anykids soon?) General lifestyle (If you jump out of planes forfun you may want to have hospitalization coverage.)

This year, PSU managed to secure an insurance contract with the Mega Life and Health Insurance Company.

Mega Life offered the best premium at $28.50. The student health fee increased by $6 to the current $116 per term. That covers the basic health plan, including mental health and the new dental services.

The contract is only for one year, however, and negotiations are underway to renew for next year. Mega Life has its ups and downs, but given PSU’s history, there have not been many other options, Collins said.

The Mega Life contract renewal for the 2005-2006 school year is “pretty good” for PSU, according to Collins. This year, the company is paying out at about 100 percent, which means they will probably break more or less even.

The recent contract negotiations established only a $1.50 premium increase to $30, but the student health fee will likely increase about $5 for the 2005-2006 school year. The fee for extended coverage is expected to rise from $226 to $253.

A major insurance change coming to the 2005-2006 school year will be a drastic drop in hospital benefits for students with the basic plan. The cap is set to change to $5,000. The current cap is set at $50,000.

Collins said $5,000 is not much for hospital coverage and added that PSU would work to get the cap higher in the future. For now, however, with limited contract options, the $5,000 cap will be put into effect. Extended coverage will retain the $50,000 cap.

Given the statistics over the last couple of school years, the new cap will likely affect about 35 students, Collins said. And if it gives the insurance company “a good experience year” (less than a 100 percent claims pay out), then PSU might be in a better negotiating position next year.

The $5,000 cap is way too low, according to ASPSU President Christy Harper, who chairs the Student Health Advisory Board. The board was established to advocate for students and insure accountability in student health services.

“Five thousand dollars won’t cover you breaking a fingernail,” Harper said.

SHAB was fighting to keep at least a $10,000 cap, but Harper says SHAB will now be focusing on the upcoming rise in and expenditure of student health fees. The fees are pooled together and used not only to pay for student health, dental and counseling services, but also to fund health center support staff. Despite the new hospitalization cap, Harper said, “I think that student health insurance is overall pretty good. It’s extremely inexpensive.”

Collins also pointed out that Mega Life requires deductible of $150 only once a year, whereas GTL required a $100 deductible “per condition.”

A seeming downside to Mega Life, said Collins, is their strict “pre-existing condition exclusion.” It is standard for insurance companies to date a pre-existing condition back to the first doctor visit for it, but Mega Life dates the condition further back to the beginning of symptoms that “a reasonable person would recognize as an illness.”

On the upside, however, Mega Life excludes a pre-existing condition for only six months and will then cover it, whereas many other companies, according to Collins, would date a pre-existing condition back to the first doctor visit and then not cover it thereafter.

Despite its rocky insurance history PSU actually offers far less expensive health insurance than other state universities in Oregon.

A comparison with the University of Oregon and Oregon State University revealed student health fees that were about double what PSU charges for seemingly similar coverage. The University of Oregon charges $482 per term for their major medical plan and OSU charges $488. They also both have an annual deductible of $300, which is twice as much as the extended plan at Portland State.

According to the student health liaison at OSU, the university has joined together with the University of Oregon as one group with the same insurance company in order to keep costs down.