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United Healthcare, Assurant Dropping Child Only Coverage

Friday, July 16, 2010

While politicians, pundits and just plain regular folks continue to debate  whether the new healthcare law will be good or bad for America, two large health insurance companies - United Healthcare and Assurant Health - have already rendered a verdict on at least one portion of the new law:  the part which guarantees coverage to children with pre-existing health conditions, scheduled to be implemented in September 2010.

Their decision? To exit the business of offering "child-only" health insurance altogether. Instead, the two health insurance giants will only insure children if their parents are current customers or Mom and Dad are buying health insurance as well.

While many will be quick to attribute the move to greedy health insurance companies abdicating their responsibility to protect America's kids, it's a matter of simple economics. Although there is still much that is murky about the way the new law will be implemented, I can imagine some absurd scenarios. For example, under the new system, i.e. guaranteed coverage for pre-existing conditions, a social worker at St. Louis Children's Hospital can simply start handing out insurance applications to the parents of patients. The parents of a child with cancer, for example, whose bills might run tens of thousands of dollars a month, would be able to start paying premiums for,say,  $125-200/mo. -- with the insurance company responsible for paying the difference.

Obviously I feel for the child with cancer, but that's not insurance anymore -- that's a social welfare program which has been shifted to the insurance companies.

Exasperating the situation is the recently-signed Missouri law which mandates that health insurance companies pay as much as $40,000 a year per child for autism treatments.

While the intent of the legislation was to bring down healthcare costs, I fear many people will see their health insurance premiums actually rise in the months ahead as these companies scramble to cover their losses insuring kids with pre-existing conditions. Other companies may follow the example of United and Assurant and simply stop offering coverage for children.

I know there is a problem with health insurance in this country but forcing the insurance companies to bear the burden by themselves is not the answer. This is just a taste of what 2014 will bring.

On January 1, 2014, the new healthcare law mandates coverage by health insurance companies of any person with any pre-existing condition, if they are not already covered by Medicaid or Medicare.

Beating the government to the punch...

Monday, May 03, 2010

Some health insurance companies are enacting changes to their policies before the deadlines set by the new healthcare law.  Some examples:

  • This month, major insurers will end the practice of "rescission,"  which involves going back and trying to find minor mistakes or omissions in applications when policyholders develop costly illnesses;
  • Many insurance companies this spring will also start covering children up to age 26 on their parent’s policies – something they weren’t legally required to do so until September

Health insurers have also decided to cover children with pre-existing conditions, even though the new law contained a loophole the insurance companies might have invoked had they wished to fight the new requirement. 

There is one large caveat to this trend; large businesses which essentially insure themselves and only use insurance companies to administer their plans. These employers will not speed up implementation of the new requirements and indeed may increase premiums when they do.  Read more about all these health insurance developments in this article in the Washington Post.

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