Insurers pull back on kids’ policies

WASHINGTON – Some major health insurance companies will no longer issue 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 several big insurers in his state will stop issuing new policies that cover children individually. Oklahoma Insurance Commissioner Kim Holland said a couple of local insurers in her state are doing likewise.

In Florida, Blue Cross and Blue Shield, Aetna, and Golden Rule – a subsidiary of UnitedHealthcare – notified the insurance commissioner that they will stop issuing individual policies for children, said Jack McDermott, a spokesman for McCarty.

The major types of coverage for children – employer plans and government programs – are not affected by the disruption. But a subset of policies 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.

The administration reacted sharply to the 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 law requires insurers to accept children regardless of medical problems. Insurers are worried that parents will wait until kids get sick to sign them up, saddling the companies with unpredictable costs.

Blue Cross and Blue Shield of Florida issues 9,000 to 10,000 new policies a year that only cover children. Vice president Randy Kammer said the company calculated that guaranteeing coverage for children could raise premiums for other policyholders by up to 20 percent.

“We believe that the majority of people who would buy this policy were going to use it immediately, probably for high cost claims,” said Kammer. “Guaranteed issue means you could technically buy it on the way to the hospital.”

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

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.