As health care law rolls out, many insurers drop child-only policies

The Miami HeraldFebruary 8, 2011 

As arguments about the constitutionality of health care reform reverberate through courtrooms in Florida and across the nation, two provisions that have already kicked in are sparking opposite reactions from insurers.

The requirement that children under 19 be granted insurance regardless of preexisting conditions has caused Blue Cross and Blue Shield of Florida and many other insurers to stop offering child-only coverage.

Insurers fear they will lose money because parents might sign up for coverage only when their children become sick. That is scheduled to change in 2014, when the law requires that virtually everyone have health insurance — a provision that a federal judge in Pensacola declared unconstitutional on Jan. 31.

But the provision requiring many employers to insure adult children up to age 26 through their parents’ plans has glided into practice with virtually no opposition because health care consultants, insurance companies and major employers believe cost increases will be minimal and benefits widespread.

A key difference between the two provisions is that employers generally insist on a limited open enrollment period during which workers must sign up for coverage for themselves and their families, said Robert Zirkelbach, spokesman for America’s Health Insurance Plans, the industry’s trade group.

Federal regulators set no enrollment time limits for children younger than 19 to sign up for insurance under individual plans. If an uninsured child was diagnosed with a serious illness, the child’s parents could sign up for insurance at that point — when costs are likely to be highest. That hurts insurers even more when parents haven’t been paying into the system along the way.

“There’s a powerful incentive to wait until after their children are sick” before signing up, Zirkelbach said.

Since that means families might tend not buy insurance for healthy children, the pool of insured children would probably have an inordinate percentage of those who are sick, said Randy Kammer, BCBSF’s vice president of regulatory affairs. That would drive up insurance costs for everyone.

BCBSF still covers all children when families sign up for policies, but has stopped offering the individual child policies. Kammer said she has heard that insurers in 29 states have stopped offering kids-only policies. Zirkelbach agreed the stoppage is widespread, though he didn’t have exact numbers.

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