Several large health insurance companies will halt their child-only insurance policies, just days before the federal health reform law would require the insurers to offer the plans to all children regardless of pre-existing medical conditions, the Washington Post reports (Aizenman, Washington Post, 9/20).
The insurers cited concerns about market instability and potential risks to their profits as key reasons for their move, which could be seen as a harbinger for what insurers might do in 2014 when the coverage requirement extends to adults, Politico reports (Haberkorn, Politico, 9/21).
Earlier this summer, state insurance commissioners said that several insurers had stopped writing new child-only plans or had discussed the idea because of the reform law's coverage requirement.
Under the requirement, insurers after Sept. 23 must honor all applications for child-only coverage, which could allow parents to sign up their children only when they got sick. Parents then could stop payments when they no longer need coverage, which insurance industry officials said would drive up medical costs and make insurers' financial risk unmanageable.
On July 28, HHS issued a clarification of the provision, noting that insurers are permitted to establish structured, open-enrollment periods for the plans in accordance to their respective state laws. Obama administration officials laid out several situations in which insurers could employ an open-enrollment period for child-only coverage. At the time, America's Health Insurance Plans and BlueCross BlueShield Association officials welcomed the new directive (California Healthline, 7/29).
However, insurers said the new directive is insufficient because it neither ensures that healthy individuals will remain in the market nor addresses how to cover anyone, healthy or sick, if they missed the open-enrollment period and a child's parent loses his or her job and health insurance coverage (Politico, 9/21).
Insurers also are concerned that without a coverage mandate in place before 2014, most of the children insured under child-only plans would be those primarily with high medical bills. Plans could be forced into bankruptcy or have to implement substantial premium hikes for all customers to recoup their losses, the Post reports (Washington Post, 9/20).
Cessation of Plans
Cigna, Humana and several BCBS companies already have stopped writing child-only policies, while Aetna will stop offering the plans in 26 states and the District of Columbia on Oct. 1, followed by other states later in the fall. On Friday, Anthem said it no longer would write the new plans after Thursday (Politico, 9/21).
However, existing child-only plans managed by the companies will not be affected, and children still would be accepted in all other plans, such as family policies.
It is unclear how many children might be affected by the changes, as child-only plans account for only a small portion of the non-group plans that are available on the individual market.
Administration, AHIP Respond to Developments
Jessica Santillo, a spokesperson for HHS, said, "We expect (insurance companies) to honor that commitment," adding that they "shouldn't break their promise or turn their backs on some of our most vulnerable Americans." Santillo cited a letter from AHIP President and CEO Karen Ignagni earlier this year, stating that the insurance industry would "fully comply" with the law's coverage requirement for children (Washington Post, 9/20).
"The administration has emphasized from the start that it would work with states, employers, consumer advocates and insurers to maintain a balance between access to coverage for children with pre-existing conditions and choice of policies for all children," Santillo said. However, Ignagni said, "The difficulty has been, if you have a policy that requires that all people participate, without having everyone in, you get those who perceive they will need insurance coverage (only) for an expensive condition" (Politico, 9/20).
Reform Advocates Call on Insurers To Reverse Decisions
Ethan Rome, executive director for Health Care for America Now, said, "The latest announcement by the insurance companies that they won't cover kids is immoral, and to blame their appalling behavior on the new law is patently dishonest." Rome said, "Instead, they should reverse their actions immediately and simply follow the law" (Pecquet, "Healthwatch," The Hill, 9/20).