Ins Co Response to Obamacare: No New Policies for Children (individual policies)

In response to the upcoming requirement to cover children regardless of pre-existing conditions; some major insurance companies have announced they will no longer offer individual policies to children.

The problem is that the requirement to accept all children would allow someone to sign up for insurance on the way to the hospital and drop it again as soon as they were discharged.

The most obvious solution is to have an open enrollment period once a year or when a family undergoes a major life change (like a divorce) so people couldn't so easily game the system.

But, as it stands now, many children may soon find it harder than ever to get insurance.

WASHINGTON (AP) -- Some major health insurance companies will no longer issue certain types of policies for children, an unintended consequence of President Barack Obama's health care overhaul law, state officials said Friday.

Florida Insurance Commissioner Kevin McCarty said several big insurers in his state will stop issuing new policies that cover children individually. Oklahoma Insurance Commissioner Kim Holland said a couple of local insurers in her state are doing likewise.

In Florida, Blue Cross and Blue Shield, Aetna, and Golden Rule -- a subsidiary of UnitedHealthcare -- notified the insurance commissioner that they will stop issuing individual policies for children, said Jack McDermott, a spokesman for McCarty.

The major types of coverage for children -- employer plans and government programs -- are not be affected by the disruption. But a subset of policies -- those that cover children as individuals -- may run into problems. Even so, insurers are not canceling children's coverage already issued, but refusing to write new policies.

Starting later this year, the health care overhaul law requires insurers to accept children regardless of medical problems -- a major early benefit of the complex legislation. Insurers are worried that parents will wait until kids get sick to sign them up, saddling the companies with unpredictable costs.

Blue Cross and Blue Shield of Florida issues about 9,000 to 10,000 new policies a year that only cover children. Vice president Randy Kammer said the company's experts calculated that guaranteeing coverage for children could raise premiums for other individual policy holders by as much as 20 percent.

"We believe that the majority of people who would buy this policy were going to use it immediately, probably for high cost claims," said Kammer. "Guaranteed issue means you could technically buy it on the way to the hospital."

Kammer said the company did not make the decision lightly. "We were looking at all our other individual policy holders who pay a lot for coverage, and we didn't think it was fair to given them that kind of an increase to benefit a small population that receives a greater advantage than they do," she said.

Industry officials estimate that children's policies account for 8 percent of single coverage plans sold directly to consumers.

To get around the problem, insurance companies and state insurance commissioners are pressing the federal government to require an open enrollment period for the guaranteed children's coverage.

Parents could only get the guaranteed coverage during a designated month each year, or if the family went through a major change, such as a divorce or a parent losing their job. Open enrollment periods are standard for most employer health plans, and some government programs.

"That seems to be a fairly reasonable approach," said Holland, the Oklahoma commissioner, a Democrat. "It would create a mechanism to get children into coverage but limit the ability to misuse the system."

State insurance commissioners who have brought the problem to the attention of the Obama administration say many insurers could stop issuing individual coverage for children. "We are attempting to convince (federal officials) that this is a serious enough concern to work with (insurers) to give them some relief," Holland said​

The entire article can be found here. (yahoo finance)

PS If you're wondering why a family would buy an individual policy for their child, I have one for one of my children. He has Down's Syndrome and is considered "high risk", so putting him on the same policy as the rest of us would greatly increase our premiums.

It's more economical to put him on his own policy which, while still expensive, is less than putting him on our family policy and having the whole family have be classified as "high risk". (I'm self employed and so don't have the benefit of a group rate).

 

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That screwy situation is not much of an explanation for why you need an individual policy - the most expensive kind - for one of your children.

Tell me again why the free market and competition has not produced an insurance company that can figure out how to include a "high risk" family member without rating everyone else in the family as "high risk".

Meanwhile, France manages to cover all of its children at less than half the US cost for only a share of them - think all these very expensive individual policies, irrational and bizarre rating methods, and associated bureaucratic overhead, might have something to do with it?

Good riddance.

 

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The requirement to cover children regardless of pre-existing conditions (referenced in the OP) comes into effect later this year. Also, the 10% tax on tanning has already gone into effect. Then there's that 1099 to anyone you buy $600 worth of stuff from which goes into effect in 2012.

I'm sure there are other provisions that take effect before 2014 as well.

 

You have a problem with the tan tax? It causes skin cancer. Oh right, it discriminates against whitey.

 

And we see that the private insurance companies were not covering them, until now.

They weren't covered, by the free market, without compulsion.

And that has been very, very expensive for the country as a whole - since we can't really just let young people suffer and die in the streets, right?

 

The law mandates high risk pools be available for people who cannot get insurance. And that insurance is passed to the consumer at the average premium rate for all individuals in the state.

There is hardly anything draconian in that. And your services, optometry, are excluded from this healthcare reform bill.

 

There are already High Risk Pools for people who can't qualify for insurance in all states.