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.
