The UC Student Health Insurance Plan projects a $57 million deficit that could spark double-digit student premium increases for the 2013-14 plan year.
A report released on Jan. 11 by Alliant Insurance Services, an actuarial firm hired to consult for UC SHIP management, said that UC SHIP has accumulated a projected $57 million deficit throughout the 2010-13 plan years.
Bahar Navab, Graduate Assembly president and UC Berkeley representative on the UC SHIP advisory board, said that the UC Office of the President is recommending student premiums be increased by an average of 25 percent for the 2013-14 plan year. The report suggests increasing premiums for UC Berkeley students by 19.8 percent as well as similar increases at other UC campuses.
“We are working with campus constituents to review numerous recommendations on how to improve the delivery of care,” said UCOP spokesperson Brooke Converse. “We are looking to gradually increase premiums to ensure that the deficit does not increase and reduce cost through improved delivery of care.”
According to the report, the unexpected deficit is in part due to “fragmented and generally incomplete” data that were given to Aon Hewitt, the actuarial firm UC SHIP hired to set premiums for the plan. Additionally, the firm did not regularly monitor plan usage unless “engaged by UC SHIP management,” the report says. UC SHIP hired new actuarial firms to replace Aon Hewitt and review the data in August.
“Self-funded programs sometimes operate in a deficit for an initial period after inception,” Converse said in an email. “As the 2011-12 plan year progressed, it became apparent that the amount of claims would exceed the projected premiums set by the actuaries.”
Navab said she was told that financial aid would not be able to cover the increase in premiums and that the hike would harm students most in need of coverage. However, Converse said that the cost of health insurance will continue to be factored into financial aid.
“If the plan continues to increase in cost, students may choose to opt out of UC SHIP,” Navab said. “What this may mean is that you will have adverse selection where those most in need of services, and thus the costly patients, will be those that stay in the plan.”
The report also recommends that the plan reduce unnecessary emergency room visits and encourage covered individuals to make use of student health services and UC medical centers instead of outside facilities to help close the deficit.
Charlie Eaton, a financial secretary for UAW Local 2865 representing UC student workers, says that students should not be the ones to suffer because of the deficit.
“Financial mismanagement is the cause of the losses from the UC SHIP, and ultimately it’s the UCOP and it’s the health services and the chief financial officer who are responsible for these huge losses,” Eaton said. “Students should not be left with the bill for UCOP financial mismanagement with a gigantic fee increase.”
A petition started by the union last week urged UC SHIP to drop its lifetime coverage and annual prescription-drug coverage caps to match requirements put in place by the Patient Protection and Affordable Care Act.
Currently, UC SHIP is not mandated to comply with the Affordable Care Act, and it is unclear how the deficit will affect the feasibility of dropping the caps.