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Policy Update: Health Insurers Scrap Child-Only Coverage

October 4, 2010
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New health insurance policies for children will be a thing of the past, thanks to some of the nation's largest health insurance providers.

The companies - UnitedHealth Group, Humana, Cigna, Aetna and Anthem Blue Cross - announced they will stop selling new child-only individual insurance policies in California and 31 other states. The move will not affect children who already have existing individual plans.

The move is in response to new health insurance market reforms that took effect on Sept. 23 as part of President Barack Obama's Health Care Reform law. Among the provisions is a new rule banning insurers from denying coverage to children because of pre-existing conditions. Insurance companies contend that, under the new rule, parents can now wait until their child gets sick before purchasing a policy. Parents could then stop payments when they no longer need coverage - which insurance industry officials said would drive up medical costs and make insurers' financial risks unmanageable.

Children-only policies are typically purchased by parents when their employer's health plan coverage doesn't cover dependents. According to America's Health Insurance Plans, the trade group for the health insurance industry, child-only policies make up 6 percent of all policies in the individual insurance market.

Cigna, Humana and several Blue Cross-Blue Shield companies have already stopped writing child-only policies, while Aetna stopped offering the plans in 26 states and the District of Columbia on Oct. 1 - with plans to follow suit in other states later this fall. Anthem said it would cease writing new child-only plans after Sept. 23.

The Department of Health and Human Services has stated that it would offer additional regulatory guidance if necessary, but reminded insurance companies that they had previously pledged to offer coverage for children with pre-existing conditions.

Some states, like Colorado, responded to the insurance companies by issuing emergency regulations that set up mandatory open enrollment periods for child-only health policies. Other states are considering stronger actions. In California, Assemblyman Mike Feuer (D-Los Angeles) authored AB 2244, which will penalize companies that drop children's coverage by blocking them from offering individual plans in the state for five years. The bill was signed by Gov. Arnold Schwarzenneger last week.

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