Understand recent health policy changes impacting students — and how your institution can respond
Changes Have Only Just Begun
Higher education risk managers are no strangers to change, but the confluence of federal policy shifts bearing down on student healthcare in 2025 and beyond is significant enough to warrant close, immediate attention. From Medicaid work requirements to the rollback of Affordable Care Act subsidies, the financial scaffolding that millions of college and university students have relied on for healthcare access is shifting — some of which began January 1, 2026, and more coming forward in January 2027.
Here’s an outline of what's changing, who's most at risk, and what risk managers can do right now.
Why Student Health Insurance Is a Risk Management Issue
It may not be obvious at first why health insurance falls within a risk manager's purview. But the connection to institutional risk is well-documented. A 2022 survey by the American College Health Association (ACHA) Coalition for Student Health Insurance Benefit Plans found that students at institutions with an insurance requirement graduated on time at rates roughly 20 percentage points higher than students at schools without one.
The mental health dimension reinforces that link even further. Analysis of college health population claims data consistently shows that mental health care accounts for more than 35% of claims — and campus counseling centers are typically resourced for acute intervention, not ongoing therapeutic relationships. That outpatient care almost always requires insurance coverage. Add to this the fact that Medicaid is the single largest payer of mental health services in the United States, and it becomes clearer why changes to that program land squarely on the desks of student health and risk professionals alike.
Currently, approximately 13% of the nearly 20 million college and university students in the US are enrolled in Medicaid — a figure that has nearly doubled from 7% since the Affordable Care Act's Medicaid expansion took effect in 2010. That represents more than one million students whose coverage depends, at least in part, on federal Medicaid policy.
What Is Changing — and When
Public Law 119-21, also known as The One Big Beautiful Bill Act (signed July 4, 2025)
This legislation has two direct impacts on students and also impacts colleges and universities. The first area of impact is Medicaid. Public Law 119-21 targets approximately $911 billion in Medicaid reductions through several mechanisms:
- Work requirements. Medicaid recipients will need to demonstrate work, volunteer activity, or enrollment in qualifying education (at least 12 credit hours for students). While college students can apply for an exemption, they will need to verify eligibility — potentially monthly, depending on the state. The Arkansas experience from 2018 is instructive: when that state implemented similar requirements, 25% of those subject to the rule lost coverage even though most would have qualified for an exemption. The likely culprit? Paperwork complexity and bureaucratic friction.
- Increased cost sharing. Copayments of up to $35 per visit, where students previously had little or no out-of-pocket cost for individuals with incomes between 100% and 138% of the Federal Poverty Level, even though premium and enrollment fees are still eliminated
- Eligibility restrictions. Limitations on non-citizen eligibility and a temporary restriction on payments to certain abortion providers.
Work requirements take effect at the end of 2026 — an extraordinarily fast implementation timeline for a policy of this scope. Other Medicaid cuts began January 1, 2026.
The second area of impact for students and institutions of higher education features reductions to graduate unsubsidized loans and Grad PLUS loans, caps on Parent PLUS loans (which impacts both undergrad and graduate students and newly introduces a per student lifetime limit), adjustments to annual loan limits commensurate with the part-time, ¾ time, or full-time status, and lastly, changes to Pell Grant Eligibility. These administrative changes to financial areas begin on June 30, 2026.
Affordable Care Act Changes
The enhanced premium tax credits introduced during the COVID-19 pandemic expired and will not be renewed. Their elimination has driven an average premium increase of 58% for all Marketplace enrollees. What is now emerging is a phenomenon known as an insurance 'death spiral' — a self-reinforcing cycle in which rising premiums prompt enrollment declines, which in turn concentrate risk among a sicker, costlier population, further driving up premiums and rendering the Marketplace financially unsustainable over time. The figure below illustrates this trend, reflecting a 17% decline in Marketplace enrollment between 2025 and 2026.
While fewer than 1% of college students directly obtain coverage through the state or federal exchange, that percentage still represents tens of thousands of individuals nationally. Families with an exchange plan and a college student have newly experienced a reduction of the income minimums from 250% of the federal poverty level (FPL) to under 200% of the FPL for low or no-cost plans. Consequently, some families are now unable to attain affordable health insurance and do not qualify for Medicaid. Compounding the issue: the February 2025 decision to cut 90% of funding for healthcare navigator programs means students and families seeking help enrolling in exchange plans will find far fewer resources available.
Employee Benefit Plan Changes
Given that the majority of students obtain health insurance through an employer-sponsored plan - either their own or a parent's - it is essential to examine how recent legislative changes affect this coverage. Notably, Public Law 119-21 and related legislation have minimal direct impact on employee benefit plans; however, the indirect consequences are considerable. When a greater share of the population loses health insurance coverage, hospitals and providers face rising uncompensated care costs, which they offset through cost-shifting, charging higher rates to other payers, including employer-sponsored plans. This dynamic helps explain why, between 2025 and 2026, employee benefit plans experienced their largest premium increase in fifteen years.
Prescription Drug Pricing
The outlook here is less certain, but no less consequential. A third of all US healthcare spending is on prescription drugs, and several competing forces are now in play: an executive order on most favored nation pricing, the rollback of authority to negotiate Medicare drug prices, and potential tariffs — including a reported 15% tariff on EU pharmaceuticals, a significant source of GLP-1 medications and cancer treatments.
In February 2026, the federal government launched TrumpRx, a website that allows consumers to print drug manufacturer coupons that can be used at retail pharmacies at the time of purchase. The caveat: an insured member cannot combine insurance discounts and cash discounts, so this method favors self-pay/cash-pay consumers.
In addition to federal changes, state laws are stepping up to address pharmaceutical cost increases by supporting Centers for Medicare & Medicaid Services (CMS)-developed National Average Drug Acquisition Cost (NADAC), which calculates the cost of a prescription based on average retailer invoice price and not the manufacturer’s price. Under NADAC, rebates are not a future receivable, but NADAC may not always be the lowest price. Whether these pressures ultimately increase or decrease drug costs is difficult to predict, but the uncertainty itself complicates multi-year benefit planning.
Who Will Feel the Impact Most
Students at rural institutions face a compounding vulnerability. Roughly 20% of American higher ed students attend schools in designated rural areas, and those communities' hospitals are often already operating on thin margins. When federal Medicaid payments decrease, rural hospitals typically face a choice: absorb the loss, reduce services, or shift costs to commercial payers. A 15% reduction in federal hospital payments in a rural county can translate directly into higher insurance premiums for everyone — including students on school-sponsored plans.
Part-time and non-traditional students face particular exposure under the 12-credit-hour work requirement exemption. A student working full-time who can only manage 10 credit hours in a given semester, someone on a medical leave of absence, or a student studying abroad may find that the exemption does not apply — and that no clear pathway to maintaining coverage under the new Medicaid requirements exists.
First-generation and low-income students will feel the administrative burden most acutely. Here’s a direct parallel to the campus insurance waiver experience: every institution that runs an annual waiver process knows that students miss deadlines, submit incomplete documentation, or simply don't know what they're supposed to do. Medicaid redetermination processes offer no comparable grace period.
Middle-wealth students will experience greater budget management challenges due to changes in loan limits. This will be a strong pain point at institutions where the premium cost for school-sponsored health insurance is not covered by institution-sponsored grant aid but only through loans. Financial aid officers may experience elevated volumes of requests for further funding without the mechanism to award such. Staying attuned to community conversations about food or housing insecurity may point to students trying to repurpose loan money for healthcare in emergency situations.
What Risk Managers Can Do Now
Know your numbers. Do you know what percentage of your students are on Medicaid or what percentage receive loan funding? What percentage uses the ACA exchange? What are your student health plan's top-cost benefit categories? If you don't have this data, now is the time to get it — from your student health center, your insurance carrier, and your financial aid office. Understanding the exposure at your specific institution is the foundation for everything else.
Protect and strengthen your student health insurance requirement. This is not the moment to scale back. An insurance requirement — even one that allows for waivers when students have qualifying coverage — functions as a safety net that becomes more valuable as other coverage options erode. If your institution has one, ensure it is robust. If it doesn't, this may be a moment to revisit why.
Cross-campus collaboration is essential. The risk implications of these changes touch every part of the institution. Convene conversations with your AVP of health and well-being, dean of students, financial aid, first-gen programs, housing and residential life, and alumni affairs. When students lose coverage mid-year, their first point of contact may be a residence hall staff member or a financial aid counselor, not a risk manager. Make sure those colleagues understand what's happening and have referral pathways in place.
Watch for leading indicators. Elevated requests for emergency financial assistance to cover medical costs, increases in general liability claims (uninsured individuals sometimes rely on incident reports as a pathway to care), and sustained spikes in any peer-based or non-billed group counseling/support groups, as well as elevated amounts of uncompensated care at the health center, can all signal that students are going without coverage. Monitoring these metrics now — before the January work requirement implementation date — gives you a baseline.
Engage your resources. URMIA, the American College Health Association (ACHA), and independent organizations for national health policy research and news all have materials relevant to this moment. Additionally, your student health insurance carrier, consultant/broker, or internal director for student insurance should be providing context about how some of these changes could impact your students' access to healthcare. If they're not, ask for it.
The Bigger Picture
Nearly one in five higher ed students faces the possibility of losing or significantly reducing their financial means of accessing healthcare over the next 12 to 18 months. The administrative requirements, premium increases, decreases in funding or subsidies, and erosion of navigator support will disproportionately affect students who already face large barriers to success. Colleges and universities that are prepared for this transition will be able to act; those that are not will be scrambling when students show up on campus without coverage.
Healthcare access and student success are not separate conversations. For higher education risk managers, ensuring that your institution is positioned to support students through this transition — with relevant information, referral pathways, and a clear-eyed understanding of the financial landscape — is as much a part of the job as any other institutional risk.
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