States beef up child-only insurance requirements

As insurers try to find loopholes to complying with the health reform law's requirement that they cover children younger than 19 with pre-existing conditions, states have beefed up their own laws to ensure coverage, Kaiser Health News reported.

In fact, 22 states and the District of Columbia have taken steps encouraging insurers to sell child-only health plans, according to a new Commonwealth Fund study. These steps ranged from making child-only policies a condition of selling other individual policies to establishing specific enrollment periods for child-only policies to creating reinsurance mechanisms that compensate insurers if they incur high costs covering high-risk kids.

Child-only health insurance is a relatively small market, comprising only about 10 percent of individual policies sold, but it's often considered critical for people needing the coverage. That's why children's health advocates are applauding the recent bout of state changes, which they say have already led to insurers re-entering the child-only market and, in some cases, insurers selling child-only plans for the first time.

But insurers haven't been as positive about the changes, saying they're concerned the costs associated with providing child-only policies could significantly increase now that they're prohibited from denying children with certain pre-existing conditions.

If insurers have to accept all sick and healthy children, there's no incentive for parents to buy coverage until they're about to incur high expenses. "Nobody with a child without insurance would buy it unless they were on their way to the hospital," Philip Barlow, associate commissioner for insurance for the D.C. Department of Insurance, Securities and Banking, told KHN. "I understood completely the problem that insurers were facing."

Plus, states lack specific experience with child-only policies, so most have implemented these laws without requiring everyone buy insurance. By not spreading insurance risk to cover the high costs of sick people, states could inadvertently be forcing some insurers to pull out of their markets, Susan Pisano, a spokeswoman for America's Health Insurance Plans, told KHN. "There really isn't a substitute for having everybody covered," she added.

To learn more:
- here's the Commonwealth Fund study
- read the Kaiser Health News article