U.S. Health and Human Services Secretary (HHS) Kathleen Sebelius is trying to shore up the child-only health insurance market, and House members have reported on adults’ problems with buying coverage.
Sebelius and the House members — House Energy and Commerce Committee Chairman Henry Waxman, D-Calif., and Rep. Bart Stupak, D-Mich., chairman of the committee’s oversight and investigations subcommittee — have been responding to consumer complaints about gaps in coverage access that persist despite the start of implementation of the Affordable Care Act, the legislative package that includes the Patient Protection and Affordable Care Act (PPACA).
Many reports have surfaced about insures dropping child-only health insurance programs. Health insurers say a PPACA provision that requires insurers to sell coverage for children on a guaranteed-issue basis could expose child-only plans to severe antiselection problems, by encouraging parents to pay for coverage when and only when children appear to need medical care.
Federal regulators and some state regulators have tried to address antiselection concerns by saying insurers can discourage parents from buying coverage at the last minute by making guaranteed-issue coverage available only during specific open-enrollment periods, such as annual open-enrollment months, and after major life events, such as birth, adoption or loss of other coverage.
Sebelius, a former president of the National Association of Insurance Commissioners (NAIC), Kansas City, Mo., has written to NAIC President Jane Cline, the West Virginia commissioner, to describe the steps that HHS officials believe states can legally take to keep carriers in the child-only market.
HHS officials do not think states can set up an open-enrollment period that applies only to
children with health problems, Sebelius says.
Some insurers have asked regulators to schedule open-enrollment periods for sick children and let carriers sell child-only coverage to healthy children throughout the year, Sebelius says.
HHS officials “have concluded that the approach they advocate is legally infirm, and inconsistent with the language and intent of the Affordable Care Act,” Sebelius says. “Nor would it be lawful for a state to allow denials of coverage for children based on pre-existing conditions outside of an open enrollment period.”
States can establish uniform open-enrollment periods for all children under 19, Sebelius says.
The Affordable Care Act will prohibit new insurance plans from using health status information in pricing decisions starting in 2014. Up until then, states can let insurers adjust rates to reflect the cost of covering children with health problems, Sebelius says.
Sebelius says states also can:
- Discourage antiselection by making consumers pay a surcharge for dropping coverage and then reapplying for it.
- Imposing rules that discourage employers from dumping workers’ children into child-only
programs, rather than continuing to cover the children as group plan dependents.
- Let insurers sell new, self-sustaining child-only coverage, and separate the new business from closed child-only blocks of business.
- Pass laws requiring insurers to sell coverage to all children, or all residents, on a guaranteed issue basis, or requiring all insurers in the individual health market to sell child-only coverage.
- Expand enrollment in Children’s Health Insurance Program plans.
- Encourage more parents to apply for their children to join Pre-Existing Condition Insurance Plan programs and state high-risk pool programs.
Meanwhile, Waxman and Stupak say in two separate memos to other members of the committee that people with pre-existing conditions, and especially pregnant women and families that are adopting, are facing serious problems with getting coverage.
From 2007 to 2009, 4 large carriers denied to coverage to about 651,000 people based on their medical history, and one carrier had a list of 400 medical diagnoses that would trigger a permanent denial, the lawmakers say.
During that period, the number of applications the carriers received increased 16%, and the number of applications they denied increased 49%, the lawmakers say.
At one carrier, about 15% of the individual insureds have riders that limit coverage or increase deductibles for some conditions, the lawmakers say.
Meanwhile, the lawmakers note in the second memo that all 4 carriers would treat pregnancy as a reason for an automatic denial of an application for individual health coverage. Many carriers refuse to sell individual coverage that covers maternity-related expenses, and policies that do provide maternity coverage may impose tight limits on benefits, or require women to meet high deductibles before seeking reimbursement for maternity-related claims, lawmakers say.
America’s Health Insurance Plans, Washington, says in a statement that carriers use medical underwriting in an effort to keep coverage as affordable as possible for the people they do insure, and to reduce the risk of adverse selection.
“In the current individual market, applicants undergo an underwriting process to discourage people from purchasing coverage only after they need medical services, which drives up costs for all policyholders,” AHIP says. “Health plans recognize that individuals with pre-existing medical conditions have difficulty obtaining coverage and proposed reforms to end pre-existing conditions exclusions and discontinue rating based on health status and gender. There is broad agreement among policymakers and health care stakeholders that for these market reforms to work everyone needs to have health care coverage.”