HHS pumps up rhetoric but eases rules on health insurance for kids

Sep 28 2010

Politico reports that the administration "is taking health insurers to task again, this time for choosing to no longer sell plans intended to cover sick children." Insurers "have said in recent weeks that they would stop selling 'child only' insurance plans because the overhaul requires them to accept all applicants, even if they apply for coverage at the last minute before treatment." In a letter to industry groups, Health and Human Services Secretary Kathleen Sebelius highlighted the "plight of millions of parents who desperately want to provide health coverage and critical treatments" in the face of insurer decisions.

But, Politico adds, the agency "said insurers could raise rates based on health condition — though doing so will be illegal beginning in 2014; issue different rates for child-only policies and dependent children; impose a surcharge for dropping coverage and subsequently reapplying; and instituting rules to preventing 'dumping' the policies" (Haberkorn, 9/25).

Separately, Politico Pulse highlights a novel approach to the problem. "The New Hampshire Department of Insurance is warning insurers that they can't discriminate based on age, so insurers who sell in the individual market can't insure adults and not children."

Insurers are at odds in a number of ways with the officials who must implement the new regulations, Modern Healthcare reports. In addition to the announcement by major insurers, including Aetna, Cigna and Anthem, that they would no longer offer child-only policies, "[t]here were also signs that companies would stop offering new individual and family policies if forced to spend at least 80% of premiums on medical care and quality-improvement initiatives, a formula known as the medical loss ratio." Sebelius also attacked the industry in a recent letter for blaming the new health law for increasing premiums but insurance industry officials argue that rates are rising because of rising health costs (Blesch, 9/27).

Meanwhile, according to the public radio program Marketplace, insurance companies are doing some letter writing of their own. They've produced around 600 pages in total addressed to a group at the National Association of Insurance Commissioners, which is drafting regulations for the medical-loss ratio provision. A typical gripe from one of the letters: "we are concerned that the current proposal does not include loss adjustment expenses." Another: "complying with the various requirements will require additional resources in terms of information technology and human resources" (Warner, 9/21).

The Labor Department also weighed in with a guidance last week, Business Insurance reports. "The most significant changes [in the] guidance involve [health overhaul] provisions affecting coverage decisions and review procedures. For example, the law requires that health plan enrollees be notified of an urgent care coverage decision within 24 hours of a request. A decade-old Labor Department rule had required that such decisions be made within 72 hours" (Geisel, 9/27).