PA small-group insurance reform could impact PA colleges...

... says a major Philadelphia law firm in an email to me:

Pennsylvania's Proposed Small Group Insurance Reform May Impact
Pennsylvania Colleges and Universities

By: Michael F. Consedine
and Sean T. O'Neill

Pennsylvania colleges and universities should closely monitor a bill the
Pennsylvania General Assembly is currently considering on small group
health care reform. If enacted, provisions in this legislation would
require most schools to establish, provide and maintain mandatory
student health insurance programs. Failure to comply with the law would
carry significant penalties.

The changes impacting Pennsylvania colleges and universities are part of
a larger piece of legislation designed to reform health insurance for
small groups. The goal of small group health care reform is to make
health care more affordable for families and small employers by limiting
the way insurers may underwrite and rate health insurance. Both small
group health care reform and mandatory health insurance for college
students are part of Pennsylvania Governor Ed Rendell's "Prescription
for Pennsylvania," which is a sweeping set of proposed reforms to
Pennsylvania's health insurance market.

House Bill 2005 ("HB 2005" or "the Bill"), introduced in mid-November,
implements both small group health care reform as well as mandatory
college health insurance requirements. While the focus of the Bill is
primarily on small group insurance reform, Section 4206 of HB 2005 also
establishes some important health insurance mandates for Pennsylvania
colleges and universities:

* Requires that the Pennsylvania Insurance Department establish a
"minimum health benefit package" for full-time students enrolled in
baccalaureate and post-baccalaureate programs in the Commonwealth.
Within 120 days following the Department's implementation of the
package, all health insurers will be required to offer the minimum
health benefits package as individual coverage available to students and
as group coverage available through the educational institution.1
* Requires every full-time student enrolled in a public or private
baccalaureate and post-baccalaureate program to continuously maintain at
least the minimum health benefits package.
* Requires students to annually present evidence of coverage.
* Requires every college or university or post-baccalaureate
program to make available to students health insurance coverage that
they can purchase on a group or individual basis.
* There is an exception for the above requirements for schools
that provide on-campus student health care coverage equivalent to the
minimum benefits package through their own clinics and health care
facilities, and receive approval from the Pennsylvania Department of
Education that such coverage is equivalent. The coverage must provide
that the student is covered for hospital admissions and ER services at
facilities throughout the Commonwealth.
* Pennsylvania public and private colleges and universities would
need to annually certify that they meet the requirements of the act.
* A failure to comply with the law would carry significant
penalties including a $500 per day fine.2

HB 2005 is still in the early stages of consideration. On November 20,
2007, the House Insurance Committee approved the Bill and it is expected
that the full House of Representatives will consider the Bill in the
near future. If passed by the House, the Bill will likely face greater
scrutiny in the Republican-controlled Pennsylvania Senate. As with all
Pennsylvania legislation, the final Bill may bear little resemblance to
the current version of HB 2005. Nonetheless, given the importance of
this legislative initiative to the Rendell Administration, it would not
be unreasonable to expect that many parts of the "Prescription for
Pennsylvania," especially relatively non-controversial provisions such
as mandatory college student coverage, will ultimately be enacted. If
enacted, the Bill will be effective the first August 1 that is at least
180 days after the publication of the Commissioner's minimum health
benefits package (essentially, the next school year from six months
after the plan is in place).

While there is still much that can happen to the Bill, it would not be
premature for Pennsylvania colleges and universities to at least begin
an assessment of their own health insurance programs. Schools should
start to ask some basic questions, such as:

* Do we currently require our students to demonstrate that they
are covered by health insurance throughout their collegiate tenure? If
not, why not?
* How do we track student health insurance coverage? If needed,
could we easily demonstrate our compliance? Are we keeping any protected
health insurance information we receive from students secure and
confidential in accordance with state and federal laws governing this
information?
* Do we provide our students with an option to purchase a basic
health insurance package either on an individual or group basis?
* If we offer coverage, is our policy and insurance company
flexible enough to incorporate changes in state law that may require us
to offer a different coverage?
* If we offer students care through our own clinics and
facilities, will we be in a position to take advantage of the HB 2005
exception language, or will it be more cost-effective for us to provide
insurance through a licensed carrier (colleges and universities may not
be able to address this question until we know more about the
requirements of the minimum health benefits package)?

Colleges and universities may also want to explore providing input and
feedback to their legislators on this and related bills while they are
still in the formative phases.

1 The current version of the bill does not specify the manner in which
schools are to make insurance coverage available to students. Saul Ewing
will continue to monitor this aspect of the bill and will notify its
clients when this aspect of the bill is clarified.

2 The current version of the bill does not contemplate the consequences
of students who cannot afford to purchase insurance coverage.
Accordingly, it is not clear whether the school or the state would bear
the burden of providing insurance to those students to avoid the fines
imposed by the bill for noncompliance. Saul Ewing is aware of the
potential consequences of students that cannot afford insurance coverage
and will notify its clients when this issue is addressed and/or
resolved.

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