Insurer’s reaction to kids’ coverage protections continues to unwind

Sep 27 2010

Insurers are fleeing the market for children-only health plans because of a new requirement that forces them to take on new policy holders, even if they are already sick. The Nevada News Bureau reports that state is the latest to hear from insurers that will stop issuing such policies. The reason is that parents would be able to buy insurance plans only after children become sick, and then cancel them after a child receives treatment. The provisions sounds good, a Nevada broker said, "but the problem is the insurance companies don't know how to underwrite that or handle that because it is an unknown" (Whaley, 9/24).

The (Charleston, S.C.) Post: Likewise, as "national health care reform takes effect, health insurance carriers in South Carolina have halted access to new individual policies for children -- a move that could leave families unable to find insurance for their healthy children, advocates said. ... S.C. insurance companies said they must suspend new policies for that market because the sudden influx of sick children, and of those whose parents enroll them after learning of a major illness or accident, would drive up premiums for all policy holders" (Dudley, 9/24).

Minneapolis Star Tribune: And, "[t]wo of Minnesota's biggest health plans said Thursday they have temporarily suspended sales of individual health insurance policies because of uncertainty related to the new federal health reform law. The moves by Blue Cross and Blue Shield of Minnesota and HealthPartners came on the same day some of the federal government's most-heralded consumer protections came into effect" (May Yee, 9/23).

Portsmouth (N.H.) Herald: Meanwhile, in New Hampshire, "the state's Insurance Department took swift action on the matter Thursday when it issued a stern warning to health carriers stating it would 'vigorously enforce the law.'" In a memo to insurers, regulators wrote, "under recently enacted federal law, when carriers issue coverage to persons under age 19, that coverage must be issued on a guarantee issue basis with no provision for pre-existing medical conditions." Regulators questioned the legality of insurers' plans to stop issuing the policies altogether (McMahon, 9/24).

The Denver Business Journal: Colorado regulators took a softer approach to staunch the flight from child-only plans by their state's insurers. To encourage insurers to stay in that market, "the Colorado Division of Insurance issued an emergency regulation Thursday that sets up mandatory open enrollment periods for parents who want to get their kids that kind of health care." The state's insurance commission met with major insurers in recent weeks to determine why they planned to leave the market and said in a statement, she hopes the new rule will rein them back in even though it is not a mandate. Under the plan, parents would have two, month-long periods each year to sign their kids up for child-only plans (Sealover, 9/23).

The Denver Post adds, Colorado insurers "said they couldn't afford parents' waiting until their children grew sick and then signing up for a policy. The emergency regulation sets up open-enrollment windows in January and July, when parents can sign up healthy or sick children. Outside those months, they will have to wait" (Booth, 9/24).