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Obamacare Deep-Sixes Child-Only Plans?

3:06 PM, Jan 28, 2011 • By JEFFREY H. ANDERSON
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"What I’m not willing to do is go back to the days when insurance companies could deny someone coverage because of a pre-existing condition," President Obama said during his State of the Union address.  For the most part, this claim (or at least its plain inference) is nonsense: Obamacare's requirement that insurers must take anyone, no matter how sick they already are, without charging them a premium that would remotely cover the cost of their care, wouldn't kick in for three more years.

But one place that this sophomoric denial of basic economic realities has already kicked in is in the market for child-only insurance policies. The predictable result has been that insurers have abandoned that market en masse, rather than selling such policies at a loss. This may well provide a preview of future events in the wider insurance market if Obamacare isn't repealed. 

Politico writes:

Health insurers in 34 states have stopped selling child-only insurance policies as a result of the health reform law, and the market continues to destablize.  

According to a survey of state insurance departments by Republican Senate committee staff and obtained by POLITICO, states that have seen carriers exit the market include those that have been ardent supporters of the health reform law, like California and Oregon. Twenty states now have no insurers offering child-only policies. 

Since September, the health reform law has barred insurers from withholding policies to children under 19 who have a pre-existing condition. Rather than take on the burdensome cost of writing policies for potentially-pricey medical conditions, many carriers decided to leave the market altogether.

The Department of Health and Human Services responded by changing the rule to allow states to institute an open enrollment period for child-only health insurance plans. The move was meant to stop subscribers from jumping on plans only when they were diagnosed with a medical condition.

But the regulation seems to have done little to stop carriers from leaving the market.

“We only know of one company [a local affiliate of Blue Cross Blue Shield] offering child-only health insurance,” Dan Honey, Deputy Commissioner for Life and Health in the Arkansas Department of Insurance, said Thursday. “The actual law federal law requires no underwriting for pre-existing conditions, which means guaranteed issue. Of course once HHS came out with that directive, that’s when a lot of companies started balking.”

One of the largest insurance markets in the country, Texas, has seen all their carriers drop child-only health insurance, as have other large states including Florida and Illinois.

Other states that no longer have carriers selling child-only plans include Alaska, Arizona, Connecticut, Delaware, Georgia, Minnesota, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Rhode Island, South Carolina, Tennessee, Utah, West Virginia and Wyoming, according to the investigation by GOP staff on the Senate Health, Labor and Pensions Committee.

Sen. Mike Enzi (R-Wyo.) pressed Health and Human Services Secretary Kathleen Sebelius on the issue at a Thursday morning hearing.

“It’s absolutely devastating,” Enzi said. “The outcome is predictable as a result of the drafting that would allow people to buy a policy on the way to the emergency room.”

Don't feel too badly for the insurers, however. Insurers enjoy the confidence of knowing that Obamacare would require all Americans to buy a federally approved version of their product, while funneling (according to the Congressional Budget Office) $1 trillion of taxpayer money to them during Obamacare's real first dozen years (2014 to 2025). Rather, feel badly for the taxpayers and for those who would like to have a plentiful choice of plans and care.

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