Posted on 21 Sep 2010
As rules in the new health-care law are set to take effect after September 23 that will require such plans to start accepting children with preexisting medical conditions, some of the country's major health insurance companies have decided to stop offering new child-only plans.
The companies will continue to cover children who already have child-only policies. They will also accept children with preexisting conditions in new family policies.
Nonetheless, supporters of the new health-care law complain that the change amounts to an end run around one of the most prized consumer protections.
"We're just days away from a new era when insurance companies must stop denying coverage to kids just because they are sick, and now some of the biggest changed their minds," Ethan Rome, executive director of Health Care for America Now, an advocacy group, said in a statement. "[It] is immoral, and to blame their appalling behavior on the new law is patently dishonest."
Three insurers - WellPoint, Cigna and CoventryOne - all cited uncertainty in the health insurance market for their decisions. That incertitude and the resulting decision of other insurers to drop their child-only plans, according to WellPoint spokeswoman Kristin Binns, "has created an unlevel competitive environment."
CoventryOne spokesman Matthew D. Eyles said that the insurer was facing "unique challenges that could undermine our ability to offer value and meet our continued obligations to existing policyholders."
But officials of the Obama administration said the move contradicted a letter from the leader of one of the insurance industry's most important trade groups after the law's adoption in March. Karen Ignagni, president of America's Health Insurance Plans, expressed support for the law's provisions concerning children with preexisting conditions and promised to "fully comply" with them.
"We expect [insurance companies] to honor that commitment. Insurers shouldn't break their promise and turn their backs on some of our most vulnerable Americans," said Jessica Santillo, a spokeswoman for the Department of Health and Human Services.
Robert Zirkelbach, a spokesman for AHIP, noted that insurers will be accepting children with preexisting conditions in other types of plans.
But, he said, extending such coverage in child-only policies "provides a very powerful incentive for a parent to wait until their child becomes very sick before purchasing coverage."
Zirkelbach added that in 2014, when similar protections kick in for all individuals with preexisting conditions, virtually all Americans will be required to get health insurance.
With no such mandate currently in place, however, the result over the next several years could be that the pool of children insured by child-only plans would rapidly skew toward those with expensive medical bills, either bankrupting the plans or forcing insurers to make up their losses by substantially increasing premiums for all customers. And Zirkelbach said the effect could be compounded if only a few plans remain in the market.
It is unclear how many children will be affected. Child-only plans represent only a small share of the non-group plans available on the individual market - with somewhere between 100,000 and 700,000 children currently receiving such coverage, according to administration officials.
In some states that have separate requirements concerning child-only plans, insurers will continue to offer new policies - New York, Maine, Ohio and Virginia, in the case of WellPoint's Anthem Blue Cross and Blue Shield plans, for instance.
Most poor children with preexisting conditions already qualify for insurance through programs such as Medicaid and the Children's Health Insurance Program. And those who are not poor will be able to apply to new high-risk pools established by the law.