Last March, I wrote a detailed pieceon why Obamacare will dramatically increase the cost of insurance for young people. Yesterday, Louise Radnofsky of the Wall Street Journal reported that some colleges are dropping their student health plans for the new academic year, because the new law increases the cost of those plans by as much as 1,112 percent. And no, that’s not a typo.

Most college students are in the peak of health. Hence, covering their health care is usually a pretty easy thing to do. A number of colleges—particularly small, private liberal-arts institutions—offer their students what are called “limited-benefit” plans, which cover health expenses up to a defined cap, such as $10,000. Because expenses are capped, these plans are extremely inexpensive, with premiums ranging from $150-500 per year.

However, Obamacare prohibits capping insurance payouts, causing premiums to skyrocket. For 2013-2014, the law prohibits caps below $500,000 per year; after 2014, caps are banned entirely.

Radnofsky reports on three institutions that are facing dramatic increases in their insurance costs. At the State University of New York in Plattsburgh, she writes, the 2011-2012 school-year premium was $440 per student. Next year’s plan will cost between $1,300 and $1,600.

Lenoir-Rhyne University in Hickory, N.C. paid $245 per student per year for 2011-2012. Next year, they’ll have to pay $2,507 to meet the law’s requirements. The University of Puget Sound in Tacoma, Wash. paid even less last year—$165 a year—but will have to pay between $1,500 and $2,000 next year: more than twelve times their current insurance costs.

What’s the Obama administration’s response to this carnage? Effectively it’s this: that people should pay more for insurance, because it’s for their own good. The costlier, more comprehensive plans offer more protection, and people should be forced to buy that extra protection, even if they think it exceeds their own needs.

Michael Hash, director of the Office of Health Reform at the Department of Health and Human Services, put it this way to Radnofsky: “Given today’s health system, [limited-benefit plans] wouldn’t represent a good value…[they] would likely not begin to cover the first day in the hospital.”

But that doesn’t justify banning limited-benefit plans in their entirety. A plan with a payout cap of, say, $100,000 would still be far cheaper than what the law requires, while covering a week in the hospital.

And there’s a larger issue. It’s precisely the proliferation of overly generous insurance plans that causes runaway health costs in the first place. When you have a plan that covers everything, you tend not to be concerned with the cost-effectiveness of the care you receive. And that, in turn, leads to excess health spending, which in turn makes insurance costlier.

It’s one more way in which the “Affordable Care Act” makes health care less affordable.

Follow Avik on Twitter at @aviksaroy.