UNC System to potentially transition to self-funded health insurance model

The premium for student health insurance provided through the UNC System has more than doubled in the past decade, from $1,347 in the 2013-14 academic year to $2,756 in the 2023-24 academic year.

A proposed change to the student health insurance funding model offered across the UNC System aims to slow this increase. The Board of Governors Task Force on Pricing, Flexibility, and Affordability has been discussing the potential transition to a self-funded student health insurance plan for several years. The BOG will next discuss the proposed transition in April.

Currently, 12 percent of students in the UNC System are enrolled in Student Blue health insurance provided by Blue Cross and Blue Shield of North Carolina, which is known as a fully-insured plan.

Under a self-funded plan, students would enroll in a health insurance plan facilitated by the UNC System itself, rather than by a third party, Mona Moon, a health benefits and insurance consultant for the UNC System office, said.

Moon said the current system insurance model offers the same premium and coverage for both undergraduate and graduate students. However, she said because of the average age of graduate students, they tend to have higher health care claims.

Because some graduate students are older and have families, Jake Diana, director of health and wellness in the Graduate and Professional Student Government, said they often have different insurance needs than undergraduate students, who are more likely to be on their parents' insurance plans.

"Whenever I have the opportunity to speak to a graduate student, health insurance is always top of mind," he said.

Moon said the biggest difference between the two funding models is that in a self-funded model, the UNC System would assume the risk if the total cost of claims exceeds the money paid in premiums.

However, if the claims cost is lower than the premiums paid, the surplus would be available to reinvest in the plan for the next year under a self-funded model, potentially lowering that year's premiums. In the past five years, the annual claims cost has been on average only 79 percent of the amount received in premiums.

“It doesn't mean there wouldn't be an increase in the premium, but it would be less than it would be otherwise,” Moon said. “Whereas with Blue Cross Blue Shield, if there’s a surplus of what’s paid in premiums relative to the cost of the plan, Blue Cross retains all of that.”

In addition to the reinvested surplus premiums, Moon said under a self-funded model, the UNC System would not have to pay the state premium tax that fully-funded plans have to pay.

A feasibility study conducted by Arthur J. Gallagher & Co. was presented at a Nov. 7 meeting of the task force. This report projected the savings under a self-funded student health insurance plan could reach $5 million to $30 million in the first five years.

“The Gallagher presentation and analysis assumed the same benefit design [Student Blue currently offers],” Moon said. “So, it showed the potential for reduced cost relative to fully-insured, even with the same plan design.”

Harini Somanchi, co-director of the Department of Student Wellness and Safety in Student Government, said she thinks there has been a lot of concern at UNC specifically about a tiered funding model suggested in the Gallagher report, which would instate different premium rates for different schools in the UNC System.

“That is definitely a concern for UNC because we have a larger population of graduate and professional students at our schools than a lot of other UNC System public schools,” she said.

She also mentioned concern about a suggestion in the Gallagher report that would mandate enrollment in University-provided student health insurance for international students, who tend to have lower claims costs.

Currently, the only potential transition to self-funding being seriously discussed is for student health insurance, Moon said, which would not include the plans provided for graduate student research and teaching assistants.

Co-pays and deductibles will not change as a direct result of the proposed transition, Moon said. She said in a follow-up email statement that students would not necessarily see changes in the providers that are covered in-network as a result of the transition.

Somanchi said she is currently working on increasing awareness of the proposal and receiving student feedback about their insurance needs.

"When we go into the Campus Health Advisory Board meetings or go into meetings with the [BOG], we want to make sure that all student opinions are being represented," she said.

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