Insurers back down on child-coverage stance

Health insurance plans across the country on Wednesday began to backtrack on their decision to pull out of the child-only coverage market after the Obama administration addressed their concerns about the potential damage to their bottom lines.

The Department of Health and Human Services (HHS) on Tuesday clarified regulations mandating that insurance plans agree to cover sick children. HHS made it clear that plans are free to set up specific enrollment periods for their insurance plans if allowed under state laws.


The new rules apply to plans in the individual and group markets from Sept. 23.

Health plans had raised concerns that without the enrollment periods, parents could wait until their children get sick before seeking coverage, making it impossible for insurers to stay profitable.

The insurance industry quickly applauded the new guidance. And at least one insurer, Blue Cross Blue Shield of Florida, announced it was “pleased to announce that it will establish a process to resume the sale of Child Only policies.”

“We think this policy will ensure that children get the comprehensive coverage they need while avoiding this unintended consequence,” Scott P. Serota, president and CEO of the Blue Cross and Blue Shield Association, said in a statement. “This is consistent with other public and private health insurance programs.”

Karen Ignagni, president and CEO of America’s Health Insurance Plans, followed suit.

“Today’s announcement will help ensure millions of children have access to affordable healthcare coverage,” she said. “For years, structured enrollment periods have been used in the Federal Employees Health Benefits Program, Medicare and in employer-based coverage to minimize disruption for families, seniors and small businesses. Health plans are committed to working with federal and state officials to ensure consumers are aware of all of their coverage options, including how and when they are able to sign up for coverage.”

Nancy-Ann DeParle, director of the White House Office of Health Reform, acknowledged that the administration was under pressure to avoid unintended consequences from the healthcare reform law.

State insurance commissioners last week warned that losing access to child-only policies could hurt middle-class parents because they’d have to pay family coverage rates, which can be more expensive than buying separate individual policies.

“Some state insurance commissioners expressed concern that, without an open enrollment period that was widely communicated, people might wait until their children got sick to enroll them in coverage, causing plans’ costs to increase,” DeParle said in a White House blog post. “And we were concerned when last week, some indicated that insurance companies would choose to stop offering policies for children rather than cover kids with pre-existing conditions.”

DeParle made it clear, however, that the clarification doesn’t give the insurers a free pass.

“The new [guidance] document notes that insurance companies may establish an open enrollment period for children with pre-existing conditions,” she wrote, “and makes clear that the administration will not hesitate to issue regulations if insurance companies unfairly limit access to insurance for children who need it most.”