600,000 students — 7 percent of 18 to 23-year-olds in college — bought insurance through their school’s plans, according to the GAO. Some of these schools require students to have insurance, but the plans some schools offer are mini-med plans that provide almost no protection when students actually get sick or injured. Upping the standards may lead a few schools, like Bethany College in Kansas, to drop student plans, but it will lead to much better coverage for more students.
Avik Roy differs:
Michael Hash, director of the Office of Health Reform at the Department of Health and Human Services, put it this way to Radnofsky: "Given today’s health system, [limited-benefit plans] wouldn’t represent a good value…[they] would likely not begin to cover the first day in the hospital."
But that doesn’t justify banning limited-benefit plans in their entirety. A plan with a payout cap of, say, $100,000 would still be far cheaper than what the law requires, while covering a week in the hospital. And there’s a larger issue. It’s precisely the proliferation of overly generous insurance plans that causes runaway health costs in the first place. When you have a plan that covers everything, you tend not to be concerned with the cost-effectiveness of the care you receive. And that, in turn, leads to excess health spending, which in turn makes insurance costlier.