Stronger children's coverage rules may raise insurance costs

Some families might face higher insurance premiums because of a requirement in the new healthcare law that plans cover sick children, state insurance commissioners said Friday.

The rule barring insurance plans from turning away sick children or denying coverage for specific illnesses for children who are already covered was one of the most popular parts of the new law.

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But the new rules are leading some health plans across the country to stop issuing new child-only coverage, the state officials said. That could force parents to buy costly family coverage where in the past they could have saved money by buying separate policies for themselves and their children.

“All people are motivated by cost,” said Oklahoma Insurance Commissioner Kim Holland, “and the more we reduce opportunities in the market for them to make those decisions, the more challenging it is for them to secure the coverage that they want and be able to afford it.”

The insurance commissioners of Kansas and Florida said they were seeing a similar situation in their states.

Jessica Santillo, a spokeswoman for the U.S. Department of Health and Human Services, decried the decision by private health plans.

“We're disappointed that a small number of insurance companies are taking this unwarranted and unnecessary step,” she said. “There is no question that the Affordable Care Act will expand coverage for all Americans, including children with pre-existing conditions.  

“Helping all children get quality, affordable health insurance is a top priority. That is why we are working with the insurance industry to help ensure that quality coverage is available nationwide for children with pre-existing conditions.”

The state commissioners, who are helping write the regulations governing the overhaul of the nation's health insurance system, said they expect to see more insurers ceasing to offer new child-only coverage. They said middle-class families with healthy children, who don't have access to state public programs, will be the hardest hit.

“When it's happening with national companies, I can guarantee you it's happening probably in every state,” said Kansas Insurance Commissioner Sandy Praeger. “And once the national companies start doing it, it starts to impact the smaller, regional companies.”

Praeger said another concern was that employers tend to drop family coverage in tough economic times, leaving parents with few options if they can't buy separate insurance just for their children.

Holland said the commissioners are talking to HHS about their concerns.

“We can't tell (health plans) you have to do business in our state,” she said. “Our recourse at this juncture is to attempt to convince HHS that this is a serious enough concern that ... disrupts our markets and look to them to gain some relief or concessions.”

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