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Working Out the Kinks in Coverage for Kids

As the federal health care reform moves forward, insurers are finding ways to insulate themselves against the inevitable redefintion of “business as usual.” In both Florida and Oklahoma (and likely in other states as well) insurers have stopped writing certain types of policies — those that cover children as individuals.

Later this year, companies will be required to cover children, even those with medical problems. So, what’s the fear when this change is part of the law and is going to happen one way or the other? That parents will actually wait until their children are sick and then take out policies which will increase pay-out costs to the companies that are no longer allowed to turn those sick kids down.

Right now it does not appear that any insurers are actually canceling policies written for children, but many are refusing to issue new policies. It is estimated that of the single coverage plans consumers purchase directly, only about 8 percent cover children individually.

Alissa Fox, a lobbyist for the Blue Cross Blue Shield Association quoted in an Associated Press report said, “Our plans are very concerned about this. If the law says that insurers have to take you any time, any place, some people will see that as an opportunity to wait until their children get sick to buy the coverage.”

She also pointed out that there is no language in the health care law that would prevent a hospital from buying a policy to cover a child who has no insurance and who turns up in the emergency room.

Insurance companies and state insurance commissioners are suggesting an open enrollment period for guaranteed children’s coverage, which is not an unreasonable approach. It’s routinely used for the Medicare supplemental prescription policies that save seniors thousands of dollars every year on their medications.

Basically we are seeing the inevitable growth pains of the overhaul of a medical system that includes a complex relationship with the insurance industry. Insurers want to make sure the system cannot be misused to their economic detriment and consumers want to know they can get coverage when they need coverage.

The requirement to cover children, even those with medical issues, will take effect on September 23. The final regulations to administer that aspect of the law are not yet in place. Although the Obama administration has not responded to the issue of children’s policies, it is no doubt one of many transitional issues making a prominent appearance on the federal radar.

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