Health insurers drop coverage for children ahead of new rules

By Julian Pecquet - 09/20/10

Health plans in at least four states have announced they're dropping children's coverage just days ahead of new rules created by the healthcare reform law, according to the liberal grassroots group Health Care for America Now (HCAN).

The new healthcare law forbids insurers from turning down children with pre-existing conditions starting Thursday, one of several reforms Democrats are eager to highlight this week as they try to build support for the law ahead of the mid-term elections. But news of insurers dropping their plans as a result of the new law has thrown a damper on that strategy and prompted fierce push-back from the administration's allies at HCAN.

The announcement could lead to higher costs for some parents who are buying separate coverage for themselves and their children at lower cost than the family coverage that's available to them.

"We’re just days away from a new era when insurance companies must stop denying coverage to kids just because they are sick, and now some of the biggest changed their minds and decided to refuse to sell child-only coverage," HCAN Executive Director Ethan Rome said in a statement. "The latest announcement by the insurance companies that they won't cover kids is immoral, and to blame their appalling behavior on the new law is patently dishonest.

"Instead, they should reverse their actions immediately and simply follow the law. If the insurance companies can casually turn their backs on sick children now, who will they abandon next? This offensive behavior by the insurance companies is yet another reminder of why the new law is so important and why the Republicans’ call for repeal is so misguided."

Health plans and state insurance commissioners in July raised concerns that the new rules could lead some insurers to stop children-only coverage because families could wait until their children get sick to buy coverage.

Days later, the Obama administration issued regulations clarifying that insurers would still be able to establish enrollment periods in accordance with state law.

"To address concerns over adverse selection, issuers in the individual market may restrict enrollment of children under 19, whether in family or individual coverage, to specific open enrollment periods if allowed under state law," the Department of Health and Human Services clarified.

The issue had largely dropped out of sight since then, but insurers including WellPoint and CoventryOne have announced in recent days that they're dropping children's coverage in California, Colorado, Ohio and Missouri, according to HCAN.

"Justify High Rates"

Justify High Rates, Health Secretary Tells Health Insurance Execs

by Diana Carlton

WASHINGTON - Health and Human Services Secretary Kathleen Sebelius told insurance executives Thursday that their companies should be more transparent when they seek higher premiums amid what she called "jaw-dropping rate increases" from California to the East Coast.

"The top five largest for-profit insurance companies filed earnings of $12.2 billion last year while dropping coverage for 2.7 million Americans," Sebelius said. "It just doesn't make a lot of sense to people across America frightened that they're being priced out of the market."

The CEOs of UnitedHealth Group Inc., WellPoint Inc., Aetna Inc., Health Care Service Corp. and Cigna Corp. attended the meeting with Sebelius at the White House, along with officials from the National Association of Insurance Commissioners.

Sebelius later said the meeting "focused on what is happening with the kind of jaw-dropping rate increases that people are seeing."

President Obama dropped into the meeting briefly to hand the insurance executives a letter from Natoma Canfield, a cancer survivor of Medina, Ohio, whose health premium increased over 40 percent this year, according to Sebelius.

With comprehensive health care legislation struggling on Capitol Hill, the White House is trying to focus public attention on the record-setting insurance premium increases being announced from Connecticut to California.

Sebelius said she asked the companies to file their rate requests online, along with actuarial data that supports those requests, to give transparency and justification for raising the rates.

"Put it on a Web site, tell us what your loss trends are," she said. "Tell us what you're paying out. Tell us what you're spending in overhead and CEO salaries and advertising."

WellPoint executives have blamed their rate increases in California, which average about 39 percent for individuals, on rising medical costs and a pool of customers that is gradually becoming older and sicker as younger, healthier people drop their coverage.