Graduate student insurance subsidy unveiled; new rates set: 04/02

Stanford Report, April 10, 2002

Graduate student insurance subsidy unveiled; new rates set

Graduate students with research assistantships, teaching assistantships and fellowships will receive a new benefit that reduces the rapidly rising cost of Cardinal Care health insurance by as much as half, officials announced this week. The subsidy program is being introduced to mitigate the continued escalation in rates by private health insurance carriers.

Despite the rapid rise in insurance premiums, this new benefit means that a single graduate student with an assistantship or fellowship actually will pay less for health insurance next year. The new program also will substantially subsidize the cost of health insurance for dependents of graduate students. The rates charged by insurance carriers for dependent care policies also have skyrocketed in recent years and the university's subsidy will help reduce the associated cost increases for graduate students with families.

"Providing affordable health insurance to students ranks among the biggest challenges we face," said Gene Awakuni, vice provost for student affairs. "We are entirely at the mercy of the health care industry. We have no control over the dramatic rise in health care costs that has occurred over the past few years, yet we must still offer health insurance to students who can't find coverage elsewhere."

Without the new university subsidy, the insurance premium for a single student under Cardinal Care, a comprehensive plan created for the Stanford student community that offers access to Stanford physicians and hospitals, will rise from $243 per quarter to $368 per quarter, effective Sept. 1, 2002. About 38 percent of undergraduate students and 77 percent of graduate students currently are enrolled in the plan.

In response to those increases, the university took the unprecedented step of introducing the new benefit, which will pay a subsidy of up to half the cost of insurance for eligible graduate students and their dependents beginning Sept. 1. Because the subsidy is partly funded by a benefit charge -- subject to government approval -- on the remuneration for teaching assistants and research assistants, the amount of the subsidy varies for different graduate students. Eligibility in the program will be determined quarterly.

Directly helping students pay for a portion of the cost of health insurance is a new approach for the university to take, said Provost John Etchemendy. "We know that health insurance is an expensive necessity, and difficult to afford on a graduate student stipend," he said. "The new benefit will make insurance more affordable for these students."

Under the guidelines of the Graduate Student Health Insurance Benefit, the university will pay up to half of the cost of premiums for eligible graduate students. It also will cover up to nearly half the cost of premiums for their dependents. Students eligible for the highest subsidy include graduate students employed as research and teaching assistants with at least a 25 percent time appointment and students on fellowships who receive stipend payments of at least $2,000 per quarter. Other graduate students are eligible for subsidies, but at lower levels. (See attached chart.)

"Among Stanford's peer institutions, I believe only Columbia University offers such a subsidy for both graduate students and their dependents," Awakuni said.

Etchemendy said the cost of health insurance traditionally is taken into account in developing the graduate student budget. "We set graduate student stipends at a level that we believe allows the best graduate students in the world to come to Stanford. Escalating health insurance costs threaten that goal, but the new subsidy will more than make up for that."

Approximately 4,000 graduate students will be eligible for the highest subsidy, said Steve Olson, a financial analyst in the budget office, but most graduate students will qualify for some sort of subsidy. The program will cost the university from $3 million to $3.5 million, he said. Funds will come from a new benefits rate, expected to be between 3 and 4 percent if approved by the federal government, that will be applied to research and teaching assistantships. A similar surcharge will be applied to some graduate fellowships, he said.

Under the new benefit plan, the out-of-pocket costs for Cardinal Care insurance for a typical graduate student eligible for the full subsidy will actually decrease by 25 percent next year, Olson said. In 2002-03, costs will drop from $243 per quarter to $180 per quarter for eligible students. The full, unsubsidized rate that the university is charged by the carrier will be $368 per quarter; the university will provide a $188 subsidy.

The program also provides subsidies to cover part of the cost of dependent health care insurance for eligible graduate students. "Dependent health insurance for students' families is extraordinarily expensive," said Dr. Ira Friedman, director of the Cowell Student Health Service.

The cost of health insurance and the university subsidy for graduate students who are eligible for the full subsidy are as follows:

The full, unsubsidized rate charged by the carrier for a student and spouse will average $1,370 per quarter; the university will provide a $638 subsidy and the cost to the student will be $732.
The full, unsubsidized rate charged by the carrier for a student, spouse and one child will average $2,114 per quarter; the university will provide a $1,088 subsidy and the cost to the student will be $1,026.
The full, unsubsidized rate charged by the carrier for a student, spouse and two or more children will average $2,711 per quarter; the university will provide a $1,538 subsidy and the cost to the student will be $1,173.

Graduate students who are on less than 25 percent appointments or who do not receive stipends are eligible for smaller subsidies. (See attached chart.)

"I'm satisfied that we've done everything we can to negotiate the best insurance rates possible for students," Awakuni said. "We've even explored switching to another insurance carrier to see if we could get better rates. In the end we determined that changing carriers at this time would not yield any savings to students."

For undergraduate students, the Financial Aid Office already considers the cost of health care when building its financial aid budget, said Cynthia Hartley, director of planning and policy analysis for financial aid. "We anticipate doing that next year just as we have in the past." Funds for health insurance are included in the financial aid packages of approximately 10 percent of students on Stanford scholarships, she said. Thus for undergraduates, the money comes in the form of scholarships, she said.

All Stanford students are required to be covered by medical insurance. Approximately 62 percent of undergraduates and 23 percent of graduate students are covered by plans other than Cardinal Care.

All health insurance options for students -- including Cardinal Care -- are experiencing increased hospital and physician costs, more common use of new and expensive medical technology and pharmaceuticals, and state legislation that mandates increased mental health care benefits. These factors are all contributing to the rising costs of insurance, Friedman said.

Cardinal Care includes worldwide coverage and access to a full range of services, he said. "In talking with students, we've learned that students want the program to remain comprehensive. They want access to a full range of services, including those at Stanford Hospital."

Most services at Cowell Health Center, including office visits, lab work and short-term counseling, are free to registered students, regardless of their insurance plan.