Guaranteed health insurance coverage for children has unintended consequences

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Amy Higgins

While adults quarrel over health care reform, the victims are often those who have no say in the matter: children.

In September 2010, one of the provisions of the health care reform law went into effect. According to that provision, children with pre-existing conditions could not be denied health insurance. Although the rule was designed to secure coverage for children regardless of their health, it had an unintended consequence: Many insurers, fearing that parents would wait to buy coverage for their kids until they got seriously sick, stopped offering new children-only health insurance policies altogether.

According to a survey by the U.S. Senate Committee on Health, Education, Labor and Pensions, 34 states have seen at least some carriers of child-only insurance exit the market after health care reform was signed into law. Twenty states confirmed that they have some carriers selling child-only plans to new enrollees.

Children still are guaranteed coverage if they're on the same policy as their caregivers. They can also get coverage through Medicaid or with their state's Children's Health Insurance Program (CHIP). Yet if a child's parents are uninsured (or are enrolled in Medicare), it's not possible to add the child to an existing policy. Families whose incomes are too high for Medicaid or CHIP also could be in a tight spot -- and be unable to get child health insurance coverage.

The Children's Defense Fund (CDF), a nonprofit child advocacy organization, says about 10.4 percent of children in the United States are uninsured. The organization used information based on 2008, 2009 and 2010 data to calculate three-year percentages.

The CDF percentages vary widely by state. For instance, CDF estimates that 19.2 percent (about 1.4 million) of children in Texas are uninsured. By comparison, 4.7 percent (about 15,000) of children in New Hampshire are uninsured, the group says. This vast difference could be caused by the reaction of Texas health insurance companies to health care reform -- in September 2010, Aetna, United Healthcare and CIGNA all pulled out of the child-only health insurance market in Texas, according to the Houston Chronicle.

Working to ensure no child is left behind

Some state officials are attempting to coerce insurance companies into offering child-only policies -- and ensure that children can get coverage on the individual market.

In May 2011, for example, Colorado passed a law requiring all insurance companies offering individual adult policies to offer individual child policies as well. Meanwhile, a California law that took effect in January 2011 prohibits insurance companies from selling new policies in the individual insurance market for five years if they refuse to sell child-only plans. It also limits the amount that insurers can charge for premiums for children's coverage.

To prevent parents from waiting until children are ill to purchase coverage, Colorado and California have established open enrollment periods. Colorado's law, for example, established two open enrollment periods a year, with each lasting a month. During these enrollment periods, children under 19 can't be denied coverage. If they apply for coverage outside these open enrollment periods, they can be turned down for pre-existing conditions.

Parents should keep in mind that just because they can get health insurance for their children, it won't always be affordable. According to health insurance provider Kaiser Permanente, insurers have the option to charge higher monthly premiums (up to twice as high) for high-risk children than they would charge for standard-risk children.