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Insurers Say They'll Work with HHS to Fix Problems in Child-Only Market

By John Reichard, CQ HealthBeat Editor

September 27, 2010 -- The nation's biggest health insurance lobby said Monday that it will work with federal regulators to fix the problems in the child-only market that have emerged since the health care overhaul law was passed.

The law, in general, requires insurers who offer family policies to cover children with pre-existing medical conditions. Traditionally, some insurers have also offered policies to people who want to cover only their children rather than the entire family. But since the overhaul (PL 111-148, PL 111-152) was enacted, some companies that offer those child-only plans have said they intend to discontinue them. They contend that because of provisions in the law that require insurers to cover children regardless of their medical history, parents will wait to buy policies until their children get sick, thus making the plans unaffordable.

New requirements to ensure access to family coverage by children with pre-existing medical conditions have "worked well," industry spokesman Robert Zirkelbach said in an e-mail. But "in the small but critically important niche market for child-only policies, a powerful incentive has been created for parents to defer purchasing coverage until after their children need it," said Zirkelbach, press secretary for America's Health Insurance Plans (AHIP).

"We will continue to work with regulators to try and find workable solutions to stabilize the market for new child-only coverage,'' Zirkelbach added.

Zirekbach was responding to a letter that Health and Human Services Secretary Kathleen Sebelius sent to AHIP late Sept. 24 to complain that the reports of insurers dropping child-only policies meant its members were not living up to previous assurances on access to care for children with pre-existing medical conditions.

"Regrettably, it appears that some of your members are now turning a blind eye and declining to sell new child-only policies in lieu of offering coverage to children with preexisting conditions." This is inconsistent with a letter AHIP sent the administration in March, Sebelius said.

Previously, HHS announced it would allow insurers to institute limited enrollment periods in order to keep parents from buying child-only plans when their children are sick. The Blue Cross and Blue Shield Association hailed that decision, but apparently it was not enough to keep some insurers from planning to drop out of the market. "We still have concerns we are addressing with the administration" beyond the issue of open enrollments, a Blues spokesman said Monday.

The Sept. 24 letter from Sebelius outlines other steps insurers can take to keep them participating, such as permitting child-only rates to differ from rates for dependent children and charging parents more if they drop coverage and subsequently reapply. Insurers also can charge rates based on health status, but only before 2014. That year, rates based on health status are no longer allowed.

Neither AHIP nor the Blues had any immediate comment on whether they expected any of the plans that announced intention to drop out of the child-only market to reconsider in light of the Sept. 24 letter.

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