Despite ‘Supporting’ Insurance Regulations, Insurers Plan To Stop Selling Child-Only Policies

Despite bragging that they had proposed and supported “new insurance market rules and consumer protections to achieve universal coverage, remove restrictions on preexisting conditions,” insurers across the country are preparing to suspend child-only insurance plans “rather than comply with a new federal healthcare law that bars them from rejecting youngsters with preexisting medical conditions.” Insurers had first challenged the law’s pre-existing requirements in March, insisting that the provision would increase premiums and was not required by the law. Pressed by HHS Secretary Kathleen Sebelius, however, AHIP, the industry’s lobby, eventually relented. Karen Ignagni issued a letter promising to “fully comply with [the] regulations.”

But that has not been the case. Some insurers began pulling out of the market even after the administration tried to alleviate concerns of adverse selection by establishing a defined enrollment period, and now many others are following suit. The Wall Street Journal:

“The new federal rules required guaranteed-issue coverage for individuals under 19 without regard to affordability,” said Matt Wiggin, an Aetna spokesman. “So folks seeking coverage would be those who need immediate services for high-cost conditions.” […]

Golden Rule also recently discontinued the sale of policies to children individually. “Given current health-insurance market dynamics and regulations, it is necessary to require a parent to be on a policy in the same manner as is required on an employer group plan,” said Ellen Laden, a spokeswoman. “We continue to believe that regulations can be structured that will enable child-only plans to be offered and we are working toward that goal.”

Addressing bloggers on a call yesterday, Nancy-Ann DeParle — Director of the White House Office of Health Reform — implied that there is nothing else the administration can do to prevent issuers from leaving the market. “Our response is one of disappointment and displeasure,” DeParle said. “I think the important thing to remember is that families will have more options now than they did before. And the family policy — which is a more desirable form of coverage and what most children get — they can’t be discriminated against. So going forward, if you’re getting a family policy you can’t have an insurer say, ‘we’ll cover your family except for the child who has a heart murmor. And there is also expansions of the CHIP program and other ways this law makes children’s coverage more affordable and more accessible overall.”


Peter Harbage, a health care policy consultant, agrees. He told me that there is little else the White House could have done, outside of limiting benefits, allowing insurers to increase premiums, or making the application process somehow more complicated — in other words, allowing issuers to throw children under the bus. Moving forward, the administration will have to focus on enrolling eligible children into Medicaid, CHIP, and possibly the new high risk insurance pool programs, he says.

But given the political context, this is also an opportunity for the plans to reiterate the importance of the mandate. They may be hesitant to dramatically increase premiums for fear of being excluded from the exchanges, but weakening support for the law is not entirely without benefit.