Health Insurers Skirt New Coverage Requirement For Kids

Starting late this week, parents of children with pre-existing health conditions were expecting to breathe easier.

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That's when a provision of the federal law overhauling health care takes effect and bans insurance companies from denying individual policies for kids with a history of health problems. But families counting on the change could be in for a shock.

The Denver Post reports, "at least six major companies -- including Anthem, Aetna, Cigna, and Humana -- have said they will stop writing new policies for individual children" in Colorado. The companies "blamed health reform mandates taking effect Thursday requiring companies that write such policies as of that date to also cover sick children up to age 19," the paper said.

The Washington Post reports that three big insurers -- WellPoint, Cigna and CoventryOne -- made their decisions because of "uncertainty in the health insurance market."

By dropping all new children-only coverage before the effective day of the new mandate, the companies effectively sidestep the new requirements.

The advocacy group Health Care for America Now was the first to bring the action to widespread attention. "Even for the insurance industry this behavior is surprisingly brazen," HCAN Executive Director Ethan Rome wrote in a blog entry for the Huffington Post. "They don't like the rules, so they're going to take their ball and go home."

But the insurance industry trade group America's Health Insurance Plans rejected HCAN's contention that the companies' refusal to sell to all comers is somehow a violation of a promise made earlier this year by AHIP CEO Karen Ignagni that insurance companies would comply with regulations regarding children and pre-existing conditions.

In an interview, AHIP spokesman Robert Zirkelbach said Ignagni was responding only to promises that children wouldn't be excluded from their parents' plans and that if the kids are covered, the policies would include treatment of their pre-existing condition.

What emerged in the regulations, however, Zirkelbach said, was, in effect, a requirement that insurance companies accept children even if they are already sick. That, he said, would be tantamount to exactly what companies want to avoid with the adult population -- letting people wait until they are sick to sign up for insurance. Which is exactly why the insurance industry is so insistent on a coverage mandate: It needs premiums of healthy people to help cover the costs of those who are not.

Thus, he said, the companies in question "are having to make some difficult decisions" to stop offering coverage to all new children rather than take the chance that only the sick would enroll. At least until 2014, when everyone is supposed to be covered under the law.