Thursday, July 22, 2010

Children's Health Insurance, Scarce and Expensive

The next shoe to drop in Obamacare involves providing health insurance for children from birth to age 18. As we have indicated in prior posts, some Georgia health insurance companies are no longer offering "child only" health insurance and at least one will no longer accept child only applications after 8/15/2010.

Now word comes that Blue Cross plans in two different states are taking a different approach. The Blues in Texas and Illinois have announced filing for approval of a new child only health insurance policy.

No details on rates or benefits but the announcement to insurance agents in those states includes this comment.

Blue Cross and Blue Shield of Illinois (BCBSIL) is committed to offering the broadest possible range of products for our members, as well as to maintaining its strong financial position. Thus, on Friday, July 16, 2010, it filed a new policy called Blue Pathway to provide coverage for children age 1 through 18 when the child is the primary insured (commonly called “child-only” policy) with the Illinois Department of Insurance (DOI).

This new coverage option responds to an Interim Final Rule that was issued by the Department of Health and Human Services (HHS) to implement several provisions of the Patient Protection and Affordability Act of 2010 (PPACA). In this Rule, HHS has determined that provisions limiting the application of pre-existing condition exclusions for children under 19 means that all children under 19 who apply for insurance for which they are eligible on or after Sept. 23, 2010, cannot be denied coverage—this is commonly known as “guaranteed issue.”

BCBSIL has long supported guaranteed issue as a way to ensure access to affordable, quality health care for all Americans, particularly children and young adults. However, that must be accompanied by an effective mandate for individuals to obtain coverage. PPACA itself recognizes the importance of pairing guaranteed issue with an effective mandate to ensure a sustainable insurance marketplace, with both being required in 2014. However, this Interim Final Rule addresses only guaranteed issue for children under 19, not any current requirements for them to have health insurance.

Without the mandate, it becomes too easy for people to buy insurance only when they feel they need services. This could be compared to allowing drivers to buy auto insurance once they have a fender-bender, and then drop coverage after their car repairs (financed by the insurance company and other insureds) are complete. This leads to what insurers term as “adverse selection,” which ultimately leads to unaffordable coverage for everyone. The Wall Street Journal recently published an article that demonstrates how this happened in Massachusetts, whose mandate has not proven as effective as originally hoped. This is based on a study commissioned by the Massachusetts Division of Insurance by the consulting firm Oliver Wyman.

Translation, the premium rates for this plan will start high and get even higher the longer the plan is on the market.

The lawyers that designed Obamacrap clearly had no idea what they were doing. This is not surprising given that most elected officials have never held a real job in the private sector. 

During the interim period while we are waiting for authorization to sell this new product, BCBSIL will temporarily suspend issuing new policies to children under 19 when the child is the primary insured. BCBSIL will stop quoting its current child-only policies on July 30, and the last assigned effective dates for those policies will be Sept. 15, 2010. Any application that has not been approved by Sept. 1, 2010, will be withdrawn from consideration.

The memo from Texas Blue Cross contains language that is virtually identical to BCBSIL.

So far BCBSGA has not given any indication they will follow suit. We will continue to monitor changes in the market place, particularly as they relate to Obamacrap, and keep our readers advised.

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