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About 500,000 Kids Left Behind as Health Insurers React to Reform

In Florida and more than 30 other states, health insurance companies will stop writing policies for children this week. The move comes as provisions of the new health care law take effect.

The law requires companies to insure children with pre-existing conditions. A pre-existing condition is generally defined as a medical condition or disease that has been diagnosed or treated during a specific period of time before the insurance application is made. An applicant can be rejected even if the condition has been covered by past policies.

In the case of a discreet injury, like a broken arm, the exclusion may not pose too much of a burden on the policyholder. But for children with chronic conditions like asthma or cerebral palsy, the cost of care can place an enormous financial strain on the family.

The companies say that covering those children will threaten their financial stability. They say that requiring coverage will lead to "adverse selection," where only the sick purchase the policies and the healthy, whose premiums help to defray the costs of care for the sick, will stay away. The insurers' answer, then, is to stop selling child-only policies -- if they don't offer the policies, they can't reject any applicants. 

Reform advocates suggest that as many as 500,000 children could be affected. And they say the industry has broken faith with the government and the American people by not following through on the insurance industry's pledge to support health reform, especially with regard to covering children.

Industry representatives counter that they will still cover children under their parents' policies, emphasizing that the child-only insurance market is very small. Most children with insurance, they claim, are covered by their parents' employer-sponsored policies.

It is unclear how insurance companies will handle the child-only policies already on the books. The next few months may see an uptick in insurance coverage disputes as physicians, hospitals and clinics look to be compensated for the care they provide to children.

Resource: Washington Post "Some Insurers to Halt New Child-Only Policies" 9/21/10

 

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