By Sabrina Corlette, Georgetown Health Policy Institute
In the last couple of weeks there have been reports that some insurance companies have
decided they will no longer market “kids-only” policies, in response to the
new requirement under the Patient Protection and Affordable Care Act (ACA) that
they issue coverage to all children, even those with pre-existing health
conditions. What are these “kids-only” policies, and how many families will be affected if plans drop out of the
market?
Only a small percentage of families buy kids-only
commercial coverage – by some estimates these plans constitute 8% of all
policies offered on the individual market (in fact, AHIP found that its surveyed members only cover about 150,000 children through kids-only policies). In some cases, the
parents who buy these policies can’t obtain coverage themselves, because it’s
simply unaffordable or they have health conditions that cause insurance
companies to deny their applications.
In other cases, a parent has access to insurance through their job, but
it’s much cheaper to buy a kids-only plan than to purchase family coverage.
Currently, companies that sell kids-only policies engage
in underwriting, which allows them to deny policies to children who have health
conditions. And if they do issue
policies to these children, they often refuse to pay for the very treatment
that would help them get better.
The ACA includes an important new reform for families with children that have pre-existing health conditions – as of
September 23, 2010, plans are no longer allowed to deny these kids coverage, or
to exclude from policies the benefits they need. This provision is estimated to help 162,000 kids get
coverage they otherwise wouldn’t have.
This is a reform that should be embraced by everyone –
how can anyone justify denying a child access to health care? And early on, most health insurance
companies said they would willingly comply with the new rules.
But lately, that commitment has started to crumble as the
companies look at their bottom line and realize that covering kids who need
health care will drive up their costs.
In a move that demonstrates how dysfunctional our health system has
become – and why the broader insurance reforms, slated to go into effect in
2014, are so vital – many are now saying they want to get out of the kids’
market.
What does this mean for families?
First of all, families with children currently enrolled
in a kids-only policy don’t need to panic. Under another federal law – the Health Insurance Portability
and Accountability Act (HIPAA) – these policies are “guaranteed renewable,”
which means that they can keep their children enrolled in the policy if they
wish. Most plans won’t completely
exit the market – they are simply no longer selling the policy to new
customers. Families should be
aware, though, that they could face higher premiums over time.
For families whose kids don’t currently have coverage,
they may find that fewer plans are offering kids-only policies. But that doesn’t mean they won’t be
able to access coverage. Many families will want to explore whether their child
is eligible for Medicaid or CHIP, both government-sponsored programs for low-
and moderate-income families available in every state. Most uninsured children
in the country – two out of three – are eligible for these programs, which offer
affordable coverage without imposing any pre-existing condition exclusions.
If parents are looking for insurance on the individual
market, they should check out the new HHS website, www.healthcare.gov. The site has easy-to-use comparative
information on health plans’ family coverage options in every zip code. And
under the ACA, even if their child has a pre-existing health condition, plans
will no longer be able to deny them coverage or limit benefits, although it is
possible that they could charge them more if their child has such a condition.
Based on regulations released by the Administration earlier this week, families shopping for plans may also face “open
enrollment” periods. (See Administration’s fact sheet addressing “open
enrollments.) Insurers want to curb the practice of people signing up for coverage only when
they become sick. But the effect
could result in children having greater difficulties obtaining coverage when
they most need it. Federal officials need to ensure that “open enrollment”
policies include strong protections for kids, including making sure that
children cannot be improperly dropped from coverage and that a child can bypass
the enrollment period at critical junctures, such as when a child loses
employer, Medicaid/CHIP or other coverage.
The website also has information on the new high risk
pools, which are established in every state to provide affordable coverage to
people who’ve been uninsured because of a pre-existing health condition. For some families, if they can show
their child was either denied coverage or charged an excessive amount for a
policy, and has been uninsured for at least 6 months, these new high risk pools
could be a viable option. Federal
officials could also revisit the pools’ eligibility requirements to ensure that
sick children facing a loss of coverage can access care without having to wait
6 months. Additionally, state and federal officials running the pools need make
sure the application and enrollment process for these kids is simple and
accessible, and that the benefits effectively meet children’s unique health
care needs.
Over the coming weeks and months, it will be critical for
state and federal officials, as well as advocates for children and families, to
closely monitor health insurance companies and cry “foul” against any business
decisions that could negatively impact kids.
Of course, in 2014, when the full range of health
insurance reforms are implemented, many more options will become
available. And the dysfunctional
insurance industry model that denies millions of families access to coverage
when they need it the most will hopefully be a thing of the past.
For more information, see answers to some frequently
asked questions, available here.