New York State Attorney General Andrew Cuomo's office has been investigating school-sponsored insurance plans for college students. According to the findings of the investigation, the insurance plans have potential problems in costs and coverage.

Cuomo's office has sent letters to over 300 colleges, universities, professional and trade schools in New York and out of state, requesting that they review the sponsored student health plans and work on having the problems corrected. Cuomo has also subpoenaed some of the largest insurers, as well as several brokers, agents and consultants pursuant to the investigation. The school-sponsored health insurance industry generates more than a billion dollars a year from the one million estimated students who purchase such plans across the country.

A press release from Cuomo's office explains that often, colleges and universities require students to purchase school-sponsored insurance plans if they do not have other plans for coverage. However, the investigation has found that the school-endorsed plans have very low coverage limits, excessive cost, and inconsistencies with recent federal protections.
In the letter to the schools, Cuomo outlines the various concerns that the investigation has raised:

-- Insufficient Coverage: the AG points out that some plans have an annual aggregate cap of only $25,000 and even less, and per-illness caps of $1000-2500, which may be far too low for an incidence of serious illness.

-- Too Costly Coverage: Some plans pay out too little in complaints in comparison to the premium charged, in certain cases less that 30 cents for each premium dollar. Because of that low loss ratio, insurance companies can earn excessive profits.

-- Use of Conflicted Insurance Brokers, Agents, or Consultants: The investigation has found that some insurance brokers, agents or consultants that schools have retained may have been paid extremely high commissions that add to the students' premium costs, or have been paid commissions or bonuses to keep loss ratios low or ensuring that the schools retain a current insurer.

-- Contributions Paid To Colleges and Universities: Some health insurance brokers, agents and consultants, and health insurers have made contributions to the schools or given items of value to some schools or employees. The contributions raise issues of objectivity in hiring the brokers, etc., and in selecting health insurers for plans in students' best interest.

-- Requiring students with Medicaid to Purchase the School-Sponsored Plan: Some students who are receiving Medicaid are still being required to purchase the school-sponsored coverage at additional, unnecessary cost.

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