How will the Affordable Care Act affect Stanford student health insurance coverage?

The Affordable Care Act will eventually present Stanford students with new choices. Ira Friedman, director of Stanford's Vaden Health Center, spoke with Stanford Report about the issues students and their families must consider in the face of health care reform. Faculty and staff who work with students also should be aware of these changes and considerations.

L.A. Cicero Dr. Ira M. Friedman, director of Vaden Health Center

Dr. Ira M. Friedman is the director of Vaden Health Center.

What is new about student health insurance this year?

Over the course of this academic year, we will see exciting changes. Under the federal Affordable Care Act, (ACA), so-called "health care reform," every state will open health insurance exchanges for the first time in 2014. In California, the state health insurance exchange options will become available Jan. 1, 2014. Students should have more options for coverage as a result, but they also will need to become more informed about those options. We are closely watching the developments as the state health exchanges make more coverage information available, and we suggest students stay informed as well.


What are the implications for Stanford students from the Affordable Care Act?

The Act includes many benefits for college students, who are part of the young adult demographic being targeted by this health care reform. First, as many families are aware, since January 2012 students can remain under their parent's employer-based health coverage until they turn 26. Second, the Act strengthened insurance plans by requiring that everyone have access to a minimum set of benefits, such as specific preventive care services without a patient copay, and mental health coverage that is on par with medical coverage. Finally, beginning this coming January, many students will have access to additional health plans through each state's health insurance exchange. The Affordable Care Act has also meant, however, higher costs for established health care plans, such as Cardinal Care.


Why do students need to have health insurance before enrolling at Stanford?

For quite some time, the university has required all students to be covered by health insurance. We want to prevent students from having to interrupt their studies due to illness, and also prevent them from incurring overwhelming debt to pay for unforeseen health care expenses. Most important, it is not acceptable for a lack of adequate health coverage to be a barrier for students to obtain necessary health care.


How can students learn more about their health insurance options?

Vaden Health Center sends a summary of the next academic year's Cardinal Care coverage and costs to all students and to parents of undergraduates in late spring or early summer. The Vaden website has more information.

Students can learn more about the coming new health exchange options for California residents at The range of choices will be different in each county, and at this time there are many unknowns about what those options will include. We do not yet have complete information on plan benefits, which physicians and health providers will accept these plans, or their costs. Also, California is actively setting up rules and processes for individuals to establish their eligibility. Some Stanford students may want to obtain coverage from their home state of residence.


What advice do you have for parents in sorting through these options?

When considering the balance of costs and benefits, it's good to keep in mind that many primary care medical and mental health services are covered at Vaden Health Center under the campus health service fee. Parents should be cautious of insurance plans that do not cover specialist care and testing in the Stanford local area, which might require a trip back home for that treatment. Plans should cover treatment by Stanford's medical faculty at our university medical center. Also, employer plans may have options with very large deductibles, sometimes thousands of dollars. Families should reflect on whether they are truly prepared to pay the full deductible in the event of unanticipated illness or injury.


What advantages are there to Cardinal Care? What are the other options for students?

Students have a number of options to meet the health insurance requirement, including their parent's employer coverage, a spouse's coverage, an individual plan purchased through a broker or an insurance company, or Cardinal Care, the university-sponsored plan for students. Specifically designed for students, Cardinal Care coverage is both broad and deep and includes access to Stanford faculty specialists and hospital care at the university's medical center.


Why have Cardinal Care costs gone up?

Cardinal Care is insured by a carrier, Health Net, which bases its premium rates on our students' utilization and costs from the previous year. The number of services used and the cost of those services have been going up. In addition, the Affordable Care Act mandated that additional benefits be offered, such as specific preventive services without a patient copayment. The Act also called for additional taxes, which must be included in the premium. Altogether, it was a hefty increase, around 9 percent. To minimize the increase in premium, we increased some of the copayments and out-of-pocket maximums.


Why is Cardinal Care expensive compared to the insurance plans of some other schools?

In the end, it comes down to the strength of its benefits. But let's make sure, when comparing plans, to make a true apples-to-apples comparison. We know that Cardinal Care's cost is based on the prior year's health care expenses for the group. We have independent analysis of these costs, which are higher for Stanford for several reasons. First, our Cardinal Care population is made up largely of graduate students, who may use more services than a group made up of younger undergraduate students. Second, the Palo Alto area is among the nation's most expensive for health care. Finally, if you compare plan benefits carefully, you will see that Cardinal Care covers a higher percentage of each health care expense (including international coverage) than most any other university plan. Some universities are able to save money by self-insuring and backstopping the risk of their student insurance plans, but this practice is prohibited for private universities in California.


Why do students have to buy Cardinal Care for the entire academic year? Isn't it possible to offer students a shorter period of coverage?

In 2010, the university switched to an annual enrollment process for Cardinal Care. Why? Because allowing students to add and drop and alter coverage on a quarterly basis raised the costs for everyone. To be fair to the students who remained in the plan all year, we decided to limit the exits from and entrances to the plan. We now require a year of ongoing enrollment, unless a student graduates at the end of fall or winter quarter. To lock in these savings, we made a contractual agreement with the carrier, Health Net, to have an annual enrollment cycle.


Why doesn't Cardinal Care extend its enrollment deadline to align with the state's health insurance exchange?

Our deadline is driven by the academic calendar. Also, open enrollment periods for insurance, the decision-making period for potential enrollees, typically end before the start of the coverage period, not after. You'll notice this is also true for the health insurance exchanges. The university has built in a grace period of 15 days, until Sept. 15, to help new students get settled before classes begin. Beyond that date, changing enrollment information that is provided to the insurance company would be costly and complex.


Why can't Cardinal Care offer different levels of benefits for students to choose from?

At first glance, more choice seems like it would be good for everyone. But the dynamics of insurance plans can be deceptive. Our group, about 8,000 individuals, allows the covered population to benefit from large numbers, by which variability and risk are reduced in a large population.

If we offered more options, costs would increase, and the principle of insurance – protecting individuals from extreme health care costs – would be lost. Virtually all universities have found these dynamics to operate, and they have limited their plans to one option.


Why are issues more complicated for international students and graduate students?

Many graduate students who are research assistants or teaching assistants have part of their Cardinal Care premium covered by a subsidy from the university. That subsidy is applied directly to their university bill.

The issues for international students are a bit more complicated. Over several years, university staff became aware of many international students who needed care but were underinsured when covered by some of the less expensive plans they had purchased. Some of the plans had low coverage for major expenses, and some excluded coverage for pre-existing conditions, or wouldn't cover mental health care at all. In 2010 the university changed the waiver procedure for international students, requiring a higher standard of documentation if a student wished to purchase an alternative to Cardinal Care. Today, hundreds of international students successfully meet these requirements by choosing stronger insurance plans and the problem of underinsurance no longer occurs.


How are decisions made about Cardinal Care? What role do students have in decision-making?

The Vaden Health Center represents the student-enrollees in negotiations with carriers concerning costs and benefits. Vaden also operates the enrollment function, in conjunction with the Registrar. Vaden does not profit from the insurance plan.

Students participate and advise Vaden through the Health Insurance Advisory Committee, which is made up of student representatives appointed by the ASSU's Nominations Committee, as well as staff and administrators. This committee reviews all decisions concerning costs, plan benefits and enrollment, beginning in fall and going through the winter for the following academic year's plan.

Vaden also obtains support from a health care benefits consulting firm. The firm monitors the financial performance of the plan, contributes information about health care trends, oversees bidding and annual rate renewals, and helps develop long-term strategy, including cost control.

Because this year is such a dynamic year in health care for students, Vaden is in the process of collecting additional information about student needs and preferences in order to refine the offerings of Cardinal Care for future years. It began this spring with a presentation to the Graduate Student Council and several pilot workshops with graduate students. It will continue this fall with additional student workshops and focus groups, as well as a campus-wide survey of student health insurance coverage and preferences for coverage.