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Stanford cuts HMOs for students' spouses and children; suggests welfare as alternative

By Margie Mason Associated Press Writer

STANFORD, Calif. (AP) -- Stanford University, one of the nation's wealthiest private universities, is canceling its HMO contract to cut costs and has advised its students with families to consider going on welfare to get health insurance for their dependents.

About 250 undergraduates and graduate students must find new coverage for their 400 dependents as of Sept. 1. Stanford is considering new plans and estimates premiums will rise as much as 60 percent for dependents and 10 percent for students. The bill for a family of three could rise from $353 to $527 a month.

"We do recognize the increase is close to astronomical," said Julie Lythcott-Haims, assistant to Stanford's president.

The letter sent to undergraduates and graduate students from Stanford's student health service last month advising of the canceled HMO contract advised students who can't afford private insurance to consider public assistance for their spouses and children. It was accompanied by a flier promoting "Healthy Families/Medi-Cal," a public assistance plan for low- and middle-income families.

Stanford officials said they were merely advising students of all their options. The average graduate stipend at Stanford is about $15,000 to $20,000 a year -- which is just above the federal poverty level for a family of three.

Health Service Director Ira Friedman said he understands the students' anxiety, and that the university is working on an alternative plan, to be announced as early as Wednesday.

Some students said Stanford should consider dipping into its $8.6 billion endowment -- which ranks fourth in the nation after Harvard, Yale and the University of Texas -- to make up the difference.

"I think it's appalling where Stanford would allow it to get to the point where it asks its students to go look for public assistance. I would hope they would become extremely embarrassed," said Jeffrey Martin, an engineering doctoral student and married father of five.

"It's not like anyone is even asking for a percentage point of the endowment. It's fractions of fractions of a percent."

Stanford officials note that other prestigious universities have canceled dependent care as well.

No overall data is available on the cost and type of dependent care insurance offered by U.S. universities and colleges, but after stipends, it's of paramount concern for students, said Peter Syverson, vice president for research at the national Council of Graduate Schools.

The University of California, Berkeley cut its dependent plan last June and now suggests a menu of private and public alternatives. Harvard and the University of California, Los Angeles offer dependent coverage with hefty premiums. At the University of Wisconsin, Madison, graduate assistants get the same affordable family coverage as university employees.

Students say Stanford can do more -- the school recently received the largest-ever university donation, $400 million from the William and Flora Hewlett Foundation, but that money is limited to students at Stanford's School of Humanities and Sciences.

Stanford already dips into its endowment to subsidize student housing costs, but Lythcott-Haims wouldn't discuss whether using it to pay for dependent care is being considered.

Stanford says the cost-cutting is severe, but necessary: with a projected loss of $40 million this year, its hospital system has closed clinics and is still recovering from an $86 million operating deficit caused by a failed hospital merger.

For Colette Plum, a Fulbright Scholar who gets a $12,000 yearly stipend and is finishing her doctoral degree in Chinese history, Stanford's proposals may mean choosing between starting a family and finishing her degree. She and her husband are adopting a baby from China, and she has to prove to the Immigration and Naturalization Services that the child has health insurance and won't need public assistance.

"It's just appalling to me and almost sickening that with the amount of money Stanford is getting through the endowment, something as basic as this" isn't covered, she said.

-- Anonymous, July 25, 2001