NJ Spotlight

Proposed Bill Could Leave College Students Without Health Insurance

Eliminating insurance as college perquisite could create coverage gaps, especially among lower-income students

NJ Spotlight — Thursday, January 10, 2013

By Andrew Kitchenman

A bill being floated in the state Legislature is meant to help keep college students in school, but it could have the unintended consequence of allowing thousands of them to drop their health insurance — despite the federal mandate extending coverage to all U.S. citizens.

Understanding the quandary means grappling with the complex calculus of some of the state's insurance regulations.

The current law requires anyone attending college in New Jersey to be covered by health insurance. To keep attendance high, some colleges offer relatively inexpensive coverage.

The new proposal would eliminate health coverage as a prerequisite to college.

But under the federal Affordable Care Act, all Americans — students and slackers alike — must have access to health coverage.

And that's where the trouble starts.

The federal mandate imposes a penalty on those who decide not to buy. More importantly, it's expected that the law will drive up the price of insurance.

State lawmakers are worried that when the ACA is in place, the cost of health benefits could rise precipitously — forcing students to choose between tuition and coverage. Thus, the move to revise the older state law.

The thinking is that students can choose to pay what will be a small penalty and still be able to afford a higher education.

The bill (A- 3546) was pulled from the Assembly agenda on Thursday, when some Democrats voiced concerns about the insurance shortfall. (The Senate has already passed its version of the measure. )

Bill sponsor Celeste M. Riley (D-Cumberland, Gloucester and Salem) said she was concerned that potential students couldn't afford the increased costs and would forego a higher education.

"I don't want to make it a decision for you to have to choose between your education or your healthcare," said Riley, who supports the ACA. "I want you to complete your education, so that in a year or two you can buy health with it ."

At some private four-year colleges, coverage currently costs $400 to $600 on average. At community colleges, a barebones package that basically covers catastrophic events typically sells for $75 to $100 per year.

But college officials estimate that once the ACA is in place, annual insurance premiums would rise to anywhere from $1,200 to $2,000.

Assembly Speaker Sheila Y. Oliver (D-Essex and Passaic) said legislators are trying to balance concerns about increasing the number of uninsured with the danger of making college unaffordable. Oliver expects an Assembly vote on a revised version of the bill on February 21.

"Because so many Democrats are committed to access and availability of healthcare for everyone, there are ambivalent feelings about creating an environment where we'll take a cohort — students — who have none because they can opt out," she said.

Oliver said legislators might amend the bill so that it will expire after a certain period of time, allowing them to weigh the effect of the ACA on college students.

She added that individual colleges would still be able to mandate that their students must have insurance.

"I am particularly concerned about the community-college level, where you have adult learners who return back to school, raising families, paying mortgages. If they've got to pay an additional $1,100 for the whole healthcare policy, it's going to knock a lot of people out from getting an education."

Officials at colleges that now offer low-cost plans are lobbying for the new bill. They note that the state mandate was put in place after hospitals complained in the 1980s that too many students were seeking emergency care.

In 2014, the federal penalty will be $95 per adult and $47.50 per child up to $285 for a family, or 1 percent of family income, whichever is greater. By 2016, the federal penalty is $695 per adult and $347.50 per child up to $2,085 for a family, or 2.5 percent of family income, whichever is greater.

The bill is opposed by health advocates and insurers. They are concerned that students will choose to go without health insurance if the state doesn't bar those without coverage from attending college.

"We thought that it was a step backward for students who found coverage through their colleges," said Dena Mottola Jaborska, organizing director for New Jersey Citizen Action, which advocates for increased healthcare access.

Many uncertainties remain regarding how students would be affected by the proposed bill, including how many would be covered by their parents; how many would take advantage of federal subsidies to buy coverage through a health benefit exchange; and how many low-income students would be eligible for Medicaid.

New Jersey Council of Community Colleges President Lawrence A. Nespoli said at a January committee hearing that New Jersey is the only state in the country that prevents residents from attending community college if they don't have health insurance.

Community college officials noted that sharp insurance price increases would undermine their ability to educate low-income residents.

At the January 14 Assembly Higher Education Committee meeting, some legislators proposed dropping the insurance mandate for community colleges, while maintaining it for four-year schools.

This drew a sharp response from Bob Polakowski of the Association of Independent Colleges and Universities in New Jersey, which represents 14 private colleges.

Polakowski said that private schools like Bloomfield Colleges have many low-income students who depend on financial aid and that an increase in the cost of coverage could push them toward not attending.

The New Jersey Hospital Association took a neutral position on the bill at the January hearing.

"It does seem to go in a different direction than the Affordable Care Act and our state has gone in the last few years, because, regardless of the merits behind the policy, the result will be less people will have coverage," said Neil Eicher, the hospital association's government relations and policy director.

New Jersey Association of Health Plans President Wardell Sanders said yesterday that the Assembly should take a close look at the bill in the coming days.

"There's an important public policy issue to make sure folks are insured, especially for students who are living in a packed area and spending a lot of time together," Sanders said.

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