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Major Changes in Children’s Insurance

October 14, 2010

In an effort to make health insurance more available to kids with pre-existing conditions, the nation’s top health official said Wednesday that insurers can charge more to cover such children if state law allows.

As part of the health insurance reform bill enacted earlier this year, administration officials said insurers would no longer be able to deny coverage to children with pre-existing conditions, including kids with developmental disabilities. However, implementation has already met several roadblocks. First, in March, insurance officials said the law still allowed them leeway to deny some children. Then, after backing down from that claim, many insurance providers stopped issuing child-only policies amid concerns that parents would only enroll children with imminent, costly health needs.

Now, the Obama administration is attempting to persuade insurers to start writing child-only policies again, which are often purchased if an employer’s policy will not cover dependents or if parents cannot afford insurance for their whole family.

In a letter to the head of a trade group for state insurance commissioners this week, Secretary of Health and Human Services Kathleen Sebelius called the insurance industry moves “extremely disappointing” and outlined ways that the federal government and some states are working to encourage insurers to reinstitute child-only policies.

“Nothing in the Affordable Care Act, or any other existing federal law, allows us to require insurance companies to offer a particular type of policy at this time,” Sebelius wrote. “While we recognize industry concerns about adverse selection, we believe that there are options other than abandoning families who seek this coverage, as evidenced in states with similar laws already in place.”

In particular, Sebelius said insurers could charge more for children with pre-existing conditions in states where higher premiums are allowed for those with established medical needs. She also said insurers could restrict registration for child-only plans to certain open-enrollment periods, so long as the time frame applies to all children, not just those with pre-existing conditions.

The issue over children’s coverage is likely to linger until 2014 when the health care reform law will require nearly all Americans to have insurance. At that time, insurers will not be allowed to deny anyone, regardless of age, due to a pre-existing condition.

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