Several health insurers say they will stop selling new child-only individual insurance policies as they face a health care reform provision that will prevent them from excluding children with potentially costly pre-existing conditions.
An insurance industry representative said the decision affects a relatively small population and is being made to keep costs down for all policyholders. But a Georgetown University researcher said some middle-class children could be left vulnerable by the ensuing lack of coverage options.
Several provisions of the health care overhaul went into effect Thursday, six months after it was signed into law.
One of those could help parents who have struggled to find coverage for children with expensive medical conditions. Under the provision, insurers will not be able to exclude children from coverage because of a pre-existing health condition. This means they will no longer be able to deny coverage or agree to cover the child except for services related to certain conditions.
However WellPoint Inc., UnitedHealth Group Inc., Aetna Inc., Cigna Corp. and Humana Inc. — the five largest publicly traded health insurers based on enrollment — all have said recently they will stop selling child-only individual policies, although those children can still get coverage through a family plan in the individual market.
Individual insurance is coverage that is not offered through an employer and includes both single and family coverage.
Parents who buy single plans for their children under age 18 paid an average of $1,350 in annual premiums last year, according to a survey by the industry trade group America's Health Insurance Plans. But that cost can vary depending on where the children live and how healthy they are.
Aetna said in a statement it made the decision to stop selling to new members "to protect our current members from significant price increases," but it will continue to administer the policies it already has.
Cost is a big concern, according to Robert Zirkelbach, a spokesman for the industry trade group America's Health Insurance Plans.
The provision in the new law tries to allay that by allowing insurers to sign up children only during a fixed annual enrollment period. That is designed to discourage parents from waiting until their child gets sick before they buy coverage.
But Zirkelbach noted there's no set time of the year for all insurers to hold open enrollment like there is for Medicare Advantage plans. That means parents can still wait until their child becomes ill and then shop around for an insurer that happens to be holding open enrollment. Those customers then will generate more in medical claims than they contribute in premiums, and that could ultimate raise the cost of insurance for everyone else.
"The goal here is to make coverage as affordable as possible for all policyholders," he said.
Zirkelbach called the child-only portion of individual insurance business a niche market. AHIP estimates that child-only single coverage makes up about 6 percent of all policies in the individual insurance market. Estimates for how many children currently have this coverage vary.
About 16.7 million people have individual insurance coverage in the United States, according to the Employee Benefit Research Institute.
The decision by insurers to stop selling new child-only policies could hurt children from middle-class families that don't have employer-based coverage but have incomes too high to qualify for public assistance like Medicaid, said Jocelyn Guyer, a senior researcher with the Georgetown University Center for Children and Families.
"I think the number of children affected is very small, but the issue is some of them are particularly vulnerable," she said.
By 2014, insurers will be required to cover everyone, under the new law, and most Americans will have to buy insurance.