Some Insurers Stop Writing New Coverage for Kids

Some major health insurance companies have stopped issuing certain types of policies for children, an unintended consequence of President Barack Obama's health care overhaul law, state officials said Friday.

Florida Insurance Commissioner Kevin McCarty said in his state UnitedHealthcare and Blue Cross Blue Shield have stopped issuing new policies that cover children individually. Oklahoma Insurance Commissioner Kim Holland said a couple of local insurers in her state have done likewise.

The administration reacted sharply to the insurance pullback. "We're disappointed that a small number of insurance companies are taking this unwarranted and unnecessary step," said Jessica Santillo, a spokeswoman for the Health and Human Services department.

Starting later this year, the health care overhaul law requires insurers to accept children regardless of medical problems — a major early benefit of the complex legislation. Insurers are worried that parents will wait until kids get sick to sign them up, saddling the companies with unpredictable costs.

The major types of coverage for children — employer plans and government programs — are not be affected by the disruption. But a subset of policies — those that cover children as individuals — may run into problems. Even so, insurers are not canceling children's coverage already issued, but refusing to write new policies.

Industry officials estimate that children's policies account for 8 percent of single coverage plans sold directly to consumers.

"Our plans are very concerned about this," said Alissa Fox, a top Washington lobbyist for the Blue Cross Blue Shield Association. "If the law says that insurers have to take you any time, any place, some people will see that as an opportunity to wait until their children get sick to buy coverage."

There is nothing in the law that would stop a hospital from buying a policy for a uninsured child who came into the emergency room, she added.

To get around the problem, insurance companies and state insurance commissioners are pressing the federal government to require an open enrollment period for the guaranteed children's coverage.

Parents could only get the guaranteed coverage during a designated month each year, or if the family went through a major change, such as a divorce or a parent losing their job. Open enrollment periods are standard for most employer health plans, and some government programs.

"That seems to be a fairly reasonable approach," said Holland, the Oklahoma commissioner, a Democrat. "It would create a mechanism to get children into coverage but limit the ability to misuse the system."

State insurance commissioners have brought the problem to the attention of the Obama administration. "We are attempting to convince (federal officials) that this is a serious enough concern to work with (insurers) to give them some relief," Holland said.

Final regulations for the new children's coverage are due before Sept. 23. The requirement to cover kids with pre-existing medical problems will apply to new plans starting after that date.

HHS spokewoman Santillo would not say how the administration intends to address the problem. "We are working with the insurance industry to help ensure that quality coverage is available nationwide for children with pre-existing conditions," she said.