Medicaid expansion: One way to help college students pay for health insurance?

Some students headed for college this fall will get top-drawer health coverage at little or no cost, because Medicaid will pay the premium for the college's student health plan.

The program is already being used at some Minnesota and Montana colleges. Proponents say it gives students who are eligible for coverage under Medicaid, the state-federal health insurance program for low income people, access to a wider network of providers at the local, national and even international level. That can be an important consideration for many students who travel for internships and international study or who return to homes away from school during the summer. In addition, it generally improves student access to mental health and specialist services.

Local doctors 'often don't want to participate in Medicaid, but they will participate in student health plans,' says Stephen Beckley, a consultant on college health insurance based in Fort Collins, Colorado.

Under the health law, states can expand Medicaid coverage to adults with incomes up to 138 percent of the federal poverty level (currently $16,105 for an individual). Now that roughly half of states have adopted that expansion, colleges in a number of states, including New York, Connecticut and Oregon, are eyeing Medicaid premium assistance programs for their schools.

Cornell University in rural Ithaca, New York, is one of them. The school is working toward offering between 200 and 400 eligible in-state undergraduates student health plan coverage that's paid for by the state Medicaid program this fall.

'Traditionally students who come to Cornell with Medicaid have access to few participating providers for specialist care, such as psychiatrists, orthopedists, and ear, nose and throat specialists,' says Valerie Lyon, associate director of business and financial services at the school's health service. 'There are only a few providers to begin with in the area, and many don't participate in Medicaid.'

Cornell's student health plan coverage will cost $2,500 for the upcoming year, while the estimated cost to provide Medicaid coverage for a student will be $3,500, says Lyon. Details are still being worked out, but if all goes according to plan, the state Medicaid program will pay the student health plan premium and leave Medicaid coverage in place as secondary coverage to fill in any gaps in the student plan.

If the program is successful Lyon says the school hopes to open it up to other eligible students in the future.

'It's the best of both worlds,' she says, citing lower costs for the state and better coverage for students.

Regulations issued last year by the Department of Health and Human Services made it clear that the Medicaid program is allowed to cover insurance premiums on the individual market for Medicaid-eligible people as long as their participation is voluntary and the cost of the coverage is comparable to the cost of providing coverage under the Medicaid program, among other things. (Student health plans are considered individual coverage.)

Student health plan coverage today is generally very good, say experts. In the past, before the health law required plans to eliminate lifetime and dollar limits on coverage and provide comprehensive benefits, coverage was much more likely to be skimpy.

Now, most student plans are comparable to gold or platinum level plans on the health insurance exchanges, says Beckley.

The Medicaid program also provides comprehensive health care that meets the standards of the health law. But low reimbursement rates and administrative headaches discourage providers from participating in the program, sometimes leading to long waits for care.

Many students have multiple coverage options. In addition to student health plans and the possibility of Medicaid, many young people can stay on their parents' health plan until they reach age 26 even if they're financially independent or married. Students can also shop for a plan on the state health insurance exchanges and may be eligible for subsidies to make coverage more affordable.

While Medicaid coverage of student health plan premiums may be a really good option for some students, 'this isn't going to work for everybody,' says Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities.

The approach may work best for in-state students who are enrolled in colleges in states that have expanded Medicaid, say experts.

Students who are eligible for Medicaid in another state may be out of luck.

'It's hard to see how you're going to get Nevada Medicaid, for example, to buy the Yale student health plan,' says Solomon.

Unless a state has expanded Medicaid, it's unlikely many students will meet the criteria to qualify for Medicaid coverage in the first place. Montana is a case in point. The state hasn't adopted the Medicaid expansion. Medicaid students who participate in the premium assistance program at Montana State University in Bozeman are generally pregnant, have children or are disabled, says Jim Mitchell, student health director at Montana State University.

'It could potentially be many more,' he says.

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[Image credit: Flickr user Jackson College]