College Cancels HMO, Suggests Using Welfare

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% for dependents and 10% 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 told those 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.