Business Week examines college-recommended health insurance plans for students

Business Week recently looked at the health insurance market for college students. Some health plans schools recommend for students "turn out to be scanty at best and inferior to comparably priced alternatives" and can "leave families exposed to crippling medical bills they thought they'd protected against," Business Week reports.

According to Business Week, six out of 10 universities recommend a plan for students and three out of 10 require students to enroll in specific plans. Some colleges negotiate a standard student plan and some then automatically bill students for the plan unless they or their families opt out of the coverage. Mark Rukavina, executive director of the Access Project, said that college administrators are often unfamiliar with the insurance industry and do not negotiate the best deals.

According to the Government Accountability Office, more than half of the plans that colleges recommend offer benefits of $30,000 or less. In addition, many plans "have further limits that prevent payout of even modest maximums," according to Business Week.

Health insurance industry consultants say that the relative health of most college students makes the market very lucrative. According to Business Week, large insurers on average spend about 80% of premiums on care and keep the remaining 20% for administrative costs and profit, whereas a Business Week analysis found that several college-recommended plans spend "well below" 70% of premiums on care (Elgin/Silver-Greenberg, Business Week, 5/8).