HHS says insurers can't make it harder to enroll sick kids

Health and Human Services Secretary Kathleen Sebelius said Wednesday that health insurers can't make it harder to enroll sick children.

The plans can, however, charge higher premiums for children with pre-existing conditions in states where that's permitted.

Insurance plans in several states have stopped writing new child-only policies because the healthcare reform law prohibits them from discriminating against sick children. But insurers have come under intense pressure from Democrats and health reform advocates not to drop coverage, and they've had to come up with ways to prevent families from only buying insurance for their children when they become sick.  

One solution: Allow health plans to sign up healthy children year-round while restricting those with pre-existing conditions to limited enrollment periods during the year. 

"We have carefully considered these insurers' legal and policy arguments," Sebelius wrote in a letter to the National Association of Insurance Commissioners, "and have concluded that the approach they advocate is legally infirm, and inconsistent with the language and intent of the Affordable Care Act."

HHS is, however, "very seriously considering" creating a national open enrollment period, said Office of Consumer Information and Insurance Oversight Director Jay Angoff.

In her letter to NAIC President and West Virginia Insurance Commissioner Jane Cline, Sebelius also makes clear that HHS cannot require insurers to sell child-only policies if they want to sell family coverage in the individual market.

"Nothing in the Affordable Care Act, or any other existing federal law," she writes, "allows us to require insurance companies to offer a particular type of policy at this time."

Sen. Bob Casey (D-Pa.) wrote to Sebelius last month urging her to "use the full force and extend HHS's authority to enforce the law" and "keep members of Congress informed about any gaps in the law that may require future legislation." An HHS official said the agency responded to Casey and told him that HHS welcomes state action.

Indeed, the agency has been encouraging states to come up with their own solutions, such as requiring that insurers sell child-only policies if they want to sell family coverage; establishing open enrollment periods that treat healthy and sick children identically; allowing families to buy into Medicaid or CHIP coverage even if they don't qualify; and ensuring that state high-risk pools offer a full range of pediatric benefits.

"There are some insurers that want to find a solution to this problem," Angoff said during a call with reporters Wednesday. "I think there are insurers who will be coming back based on some of the options that we've set out."

Officials on the call announced that Kaiser Permanente of the mid-Atlantic may start offering child-only policies in Maryland. The agreement is subject to the Maryland General Assembly approving the creation of an open enrollment period for the plans so families can't wait until their children are sick before enrolling them.

"Maryland is proof-positive that by using the framework set up by HHS, states can work with insurers to offer children a number of coverage options," said Maryland Insurance Commissioner Beth Sammis.

Asked why HHS doesn't simply create a nationwide open enrollment period, Angoff said that's on the table.

"We could do that, but we need to do it by regulation. And the regulation would take some time," he said. "But that's something we're very seriously considering and talking to the industry about and if that would result in [companies restarting their coverage] I think that's something that would make a lot of sense."

Angoff also pointed out that some states allow insurers to adjust their rates based on health status, something that won't be banned until 2014 under the new law.

"Some states do prohibit it, some states do restrict it," Angoff said, "but in those states that don't then insurers have pricing freedom and they can charge people more based on health status."

That raises another concern, namely that insurers could still discriminate against children with pre-existing conditions by offering them unaffordable premiums. But an HHS official points out that the healthcare reform law offers state grants to beef up their rate review process; the law also allows states to broadly decide who can participate in the new health insurance exchanges in 2014 based on an array of factors, including premium history.