Insurance Companies Bow Out in Response to Reform

Delaware Insurance Commissioner Karin Weldin Stewart on Thursday became the latest state official to meet with insurers regarding the decision of several major companies to stop offering new child-only policies in the wake of PPACA’s requirement that children cannot be denied coverage due to pre-existing conditions. Companies fear that parents will abstain from insuring their children until they are very ill, resulting in high claims and expenses. That provision of the law took effect on Sept. 23.

Another piece of fallout from the new law is the exit of Principal Financial Group from the health insurance business. On Thursday, also reported by NU Online News Service, it was announced that the company, which primarily focuses on asset management, will no longer offer health insurance and will turn over its current health insurance customers to UnitedHealth Group. The company says that it has no economies of scale to enable it to remain competitive.