State to end health insurance program it once called a cost-saver. The reason: Costs are too high.

21,000 low-income college students will now shift off private plans

21,000 low-income college students in Massachusetts will now shift off private plans.Valerie Potapova/stock.adobe.com

Citing “untenable” price increases, state officials are scrapping a program that was intended to save the state’s Medicaid program tens of millions of dollars and offer better health care options to thousands of poor college students.

The Baker administration’s decision to eliminate its so-called premium assistance program for student health insurance plans means 21,000 students will shift off Blue Cross Blue Shield of Massachusetts plans offered through their schools, with MassHealth, the state’s taxpayer-funded Medicaid provider, becoming their primary insurer.

That, some warn, could limit access to services a vulnerable population of students has enjoyed under the private plans, which offer a broader network of doctors and coverage.

The move marks a quick demise for a program the Baker administration had called a cost-saver just three years earlier. First launched ahead of the 2016-2017 academic year, the program later required MassHealth-eligible college students to enroll in health plans offered by their college, with MassHealth paying toward their premiums.

At the time, state officials described it as a win-win: They estimated in 2017 that it would save $45 million, and the students, without shouldering any additional out-of-pocket costs, would have access to a wider network of providers beyond MassHealth and even health care coverage outside the country. (MassHealth covers only emergency care outside the state.)

It’s a “cost-effective program that provides a strong benefit for Medicaid-eligible students and students in general," Marylou Sudders, the state’s health and human services secretary, told the state’s Health Connector board in July 2018, according to meeting minutes.

But costs quickly started to rise for the state, which had to cover ever-increasing premiums that Blue Cross Blue Shield said were fueled by its coverage of the MassHealth students.

Premiums for the plans jumped 20 percent this academic year, and state officials said they were projected to jump by nearly 50 percent next year if MassHealth members remained in the program.

State officials said their decision to eliminate the assistance program, and pull MassHealth members from Blue Cross Blue Shield, was a “strategic” one designed to spare all students getting health care through their schools an increase that the Baker administration said was “not reasonable.”

Despite initially projecting tens of millions of dollars in savings, state officials say scrapping the program won’t add substantive costs. The 21,000 students are already counted on MassHealth rolls — the state was serving as their “secondary” insurer — and the rising premiums ate into the savings to such a degree that the program was becoming “too expensive,” officials said.

“This decision prevents all students receiving health care coverage through the Student Health Insurance Program from experiencing an untenable premium increase, and allows for continuous coverage for students who receive MassHealth for the upcoming school year,” said Brooke Karanovich, a spokeswoman for the state’s Office of Health and Human Services, which oversees MassHealth.

Laure Goldberg, the chief actuary for Blue Cross Blue Shield, said the insurer had done its best to not "shock the system” with premium increases, but it faced unexpectedly high costs. MassHealth students had medical expenses that were close to or more than double that of others, with claims for behavioral health and substance use services helping drive the costs.

“We weren’t necessarily aware of all of the implications of this,” said Goldberg. “There was no modeling of what these members’ costs [would be]. The increase in expenses was a surprise.”

Blue Cross Blue Shield said it handles insurance for 70,000 students overall, the MassHealth members included. All full-time college students are required under state law to have health care coverage, and must enroll in a school-sponsored health care plan if they aren’t already covered by their parents’ or some other plan.

For the MassHealth students, their transition from the private plans could narrow their choices given Blue Cross Blue Shield’s network offered “great access statewide," said Bill Devine, managing director of University Health Plans, a brokerage and consulting firm that specializes in student health plans.

“It might be a little bit more restrictive. Access to certain providers may not be there," he said. “It’s not a great thing for the students that were covered under the student health plan."

MassHealth officials disputed that, arguing it provides “comprehensive medical and behavioral health benefits.” Devine said his group is also working with the state to help communicate with students about their options.

But, Devine said, eliminating the program, and pulling MassHealth students from the school plans, should help lower premium costs for non-MassHealth students who will remain. And major changes may have been unavoidable given Blue Cross Blue Shield was losing money by covering the MassHealth population, Devine said.

“Something would have to be done at some point,” he said.

The assistance program was part of a slate of initiatives Governor Charlie Baker has pursued to curb spending in the state’s $16.7 billion Medicaid program, which is the largest single part of the state’s budget and provides health coverage to 1.8 million people, or about one of every four people living in the state.

Since taking office in 2015, Baker has moved aggressively to pare back its price tag, by redesigning the program or pushing for hundreds of millions of dollars in new fees on businesses to help cover costs. Last year, he succeeded in requiring drug companies to negotiate discounted prices with the state.

Baker’s budget office projects spending to grow by 0.6 percent, or roughly $100 million, in MassHealth next fiscal year.