Is Your Kid Covered?

http://www.businessweek.com/magazine/content/08_20/b4084041498815.htm?chan=top+news_top+news+index_top+story

In fall 2006, Ralph Giunta Sr. decided to buy his son Ralph Jr. a practical birthday gift: health insurance. The Lake Worth (Fla.) school recommended a policy provided by MEGA Life and Health Insurance, whose student business was acquired in late 2006 by giant UnitedHealthcare. Giunta wrote a check for $1,044 for one year. "They assured me he was well covered," he says.
Ralph Giunta Jr. knew something was wrong in March, 2007, when the photography major and avid skateboarder felt pain in his legs and feet. Then 19, he lost all feeling in his lower extremities and was rushed to the hospital. The diagnosis: Guillain-Barré's syndrome, a rare disease of the nervous system that typically causes temporary paralysis. His father's anxiety was compounded upon learning more about the insurance he had purchased. Even with "major medical" coverage, the plan reimbursed only $22,800 of the $206,325 bill for 19 days of intensive care.

Six out of 10 colleges and universities now recommend specific health insurance plans for their students, and three of 10 require them. But as the Giuntas discovered, many of the policies turn out to be scanty at best, and inferior to comparably priced alternatives.

Schools often arrange for a standard student plan, and some even bill for it automatically unless students or their families opt out. But the administrators negotiating multimillion-dollar insurance packages frequently aren't sophisticated or diligent enough to obtain the best deals in the marketplace, says Mark Rukavina, executive director of the Access Project.

IN WHOSE INTEREST?
In some cases, universities have comfortable relationships with carriers that reimburse the schools a small percentage of student premiums to cover administrative expenses. This raises questions about whether schools ought to serve as what amounts to a broker. I think it is OK for university to take small percentage of student premiums. The point is if the university really try their best to get the best deal for its students? If university gives up students’ interest to get the reimbursement, the university’s action is unethical.