Future of UC Student Health Insurance ‘Up to Students’

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Vice Chancellor Parham says “all options” are on the table for dealing with the UC SHIP deficit and its future.

Students will have the opportunity to become involved in the discussion regarding the UC Student Health Insurance Plan (UC SHIP) this week. The Student Health Insurance Advisory Committee (SHIAC) will be holding open forums on Tuesday, Thursday and next Monday to field questions and opinions as the UC looks to move forward on dealing with the projected $57 million deficit SHIP faces.

Vice Chancellor of Student Affairs Dr. Thomas Parham emphasized the importance of maximum student participation, as the SHIACs at their respective UC campuses will be reporting back to the Office of the President and consider options based on student input.

“I’m very interested in making sure that we provide an accurate portrayal of what the exact circumstances and what we know so far about what options we are exploring to address,” Parham said. “We want as many folk as possible to weigh in … I am not happy with the way this has turned out. I am not prepared to sit around and whine about what are the big problems — I am committed to fixing it, addressing it and finding a solution.”

A Sinking SHIP

The University of California switched to a systemwide health insurance plan in 2010. Before then, UC Irvine and other campuses respectively managed their own fully-funded health plans for students through an insurance company. When UC SHIP brought all campuses together in one pool, the goal was to eliminate the insurance company in the middle and have the premiums go directly to UC SHIP.

With this “self-funded model,” however, the UC also took on the risk of covering claims.

“There is high reward but there is high risk, if you have catastrophic claims,” Parham said. “If you can manage the plan successfully, you reduce the cost theoretically because you have a healthy population. You save potentially millions of dollars that you would be paying to insurance companies. In theories, lots of that work.”

In January, the actuarial firm that works as a consultant with the UC Office of the President for SHIP, Alliant Insurance Services, released a report that projected a $57 million deficit due to the miscalculations of the former actuarial insurance company, Aon Hewitt.

News of the deficit and rumors of higher premiums sparked protests across the UC campuses as students reacted to the situation. Dr. Parham urged students to be clear and accurate in their knowledge and appraisal of the issue.

“[The UC campuses] were sold the plan based on the fact that it would reduce cost, provide more comprehensive coverage for students, and that we would be able to realize some profits with money that would be redirected into other priorities,” he said. “Now, the plan is more costly, it definitely is more comprehensive so that part is true, but it’s costing us more. And, we haven’t realized the profits that we thought we would have realized.”

While there were a variety of factors that led to the projected deficit, Dr. Parham said the biggest was that the University did not collect sufficient premiums to cover a “robust” benefits package.

This deficit, therefore, is not money that is owed to a company; the deficit represents services and benefits that students have received, but that the premium levels did not match.

“Students are saying, ‘Why should we pay for the debt?’” Parham said. “It’s like you getting $10 worth of service, but you only paid $3 or $5 for it because we didn’t charge enough premium, but it is also services you received, because you received the full $10 worth of services.”

All Options are on the Table – for Students to Decide On

As the chair of the UC SHIP Advisory Board and member of the Executive Committee, Dr. Parham said the committee is considering all options when it comes to addressing and reducing the deficit, and reassessing the health insurance plan.

“Our challenge now is to figure out what we do about it, and what we do about it is a two-pronged approach,” he said. “A part of it is what do we do about the plan itself, as well as what do we do about the deficit.”

The options range from leaving the plan the way it is; leaving the plan self-funded, but changing the benefit structure; switching to a fully-funded model with an insurance company; or having campuses pull out and develop their own student health insurance plans.

Dr. Parham said the forums this week are a result of the recommendations from the UC SHIP committee to have maximum input from students at every campus. He estimated that approximately 60 percent and 75 percent of undergraduate and graduate students, respectively, are enrolled under UC SHIP.

This block of students, Parham said, needs to discuss and decide on which benefits they want to keep, as well as how much they are prepared to pay for them.

ASUCI President Traci Ishigo said that while student participation is essential in the upcoming forums, the UCOP should look to other options to reduce the deficit before raising premiums for students, as well as keeping Aon Hewitt accountable for its mistakes.

“We need to make sure that there is some accountability for how we got into this situation in the first place,” she said. “It is UCOP’s responsibility to make sure the actuarial firm is doing its job, and if it isn’t in place yet, the UCOP should be doing closer monitoring.

“It wasn’t the students’ fault. We were paying the premium that we were told to pay for.”

The town halls will be held three times in the next two weeks:

Tuesday, Feb. 26, 11:30 a.m.-1 p.m. at Balboa Island A

Thursday, Feb. 28, 6-7:30 p.m. at Pacific Ballroom A

Monday, March 4, 3-4:30 p.m. at Balboa Island A