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Editorial: UCLA better off staying on SHIP

The issue   UCLA has decided to stay on the University of California Student Health Insurance Plan, which is currently $57 million in debt. Other campuses have decided to pull out of the plan.  
Our stance
UCLA is making the right decision. In the long run, UC SHIP is more cost-effective than switching to a private insurance provider. A private provider might also result in fewer benefits for students.

By Editorial Board

May 23, 2013 12:00 a.m.

This board supports UCLA’s decision to stay aboard the troubled University of California Student Health Insurance Plan at a time when many UC campuses have decided to jump ship.

The program faces a $57 million debt that accumulated after premium costs were set too low in past years. The UC said premium rates were set based on advice from the consulting firm Aon Hewitt.

We acknowledge the UC should have done a better job managing its health care plan and should have maintained more rigid oversight of Aon Hewitt. But now, instead of dwelling on past mistakes and making a rash decision, UCLA has chosen the fiscally responsible route by planning for the future.

Each campus had the option to stay with the program in full or in part, or to pull out entirely.

After examining alternative options, UCLA officials realized there would be a rise in premiums whether the university stayed in the plan or switched to a private insurance provider.

It was also possible that UCLA students would get fewer benefits if the university switched to another plan, said Scott Arno, a UCLA graduate student in neuroscience and a member of the UC SHIP Advisory Board.

A previously suggested strategy of “smoothing” would have spread the deficit evenly across all campuses.

All campuses, regardless of whether or not they stay with UC SHIP, will bear the burden of their own deficit instead of having to cover for others, Arno said.

UC officials, however, have not yet set in stone how the UC SHIP deficit will be addressed, but have said premiums will not increase to cover the deficit.

A 17 to 18 percent increase is likely for UCLA graduate students, and undergraduates could see a 12.5 percent increase in their plan next year, Arno said. The increase is meant to address the removal of health insurance caps and bring premium costs in line with the market rate.

Earlier this year, under the smoothing strategy, officials expected about a 20 to 25 percent increase in premiums.

Other campuses are looking to independent, alternative solutions. UC Berkeley, for example, is set to transition to a fully funded plan. The fully funded plan will not necessarily save campuses money, but will provide financial stability for the time being, said Kim LaPean, a UC Berkeley spokeswoman.

But in the long run, Arno said self-funded plans like UC SHIP can be more cost-effective for UCLA because they are more flexible and save the university administrative costs – a line of reasoning we agree with.

While UCLA officials seem to have done a good job weighing multiple options, we hope the UC will finalize impending premium increases soon and will inform students of the pending changes as soon as possible.

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