New State Law Compels Health Plans To Resume Coverage for Children
Some of the largest health insurers in California have retracted their previous decision to stop selling policies for children in light ofÂ a new state law (AB 2244) that prohibits companiesÂ that lack child-only plans from selling new policies on the broader individual market, the Los Angeles Times reports.
In September, a number of insurers in the state ceased sales of individual policies for children, avoiding a provision in the federal health reform law that required them to cover individuals younger than age 19, regardless of pre-existing medical conditions.
The insurers argued that covering many sick children would result inÂ large and unexpected costs, especially if their competitors left the market.
Details of AB 2244
However, a new state law prohibits companiesÂ that do not accept children from selling new policies in the larger individual insurance market for five years, which would cut insurers' profits significantly. The state has a large number of customers in the individual market, which brought in $17 billion in revenue last year in California, according to the Times (Helfand, Los Angeles Times, 12/23/10).
In response to the new law, several companies -- including Aetna, Anthem Blue Cross, Cigna, Health Net and UnitedHealth Group -- notified the state Department of Insurance that they would resume sales of child-only coverage starting Jan. 1 (Gumz, Santa Cruz Sentinel, 12/26/10). About 80,000 California children lack insurance through family policies or their parents' employer.
The new state law mandates that parents must apply for coverage during an open-enrollment period from Jan. 1 through March 1, or in the month following a child's birthday.
The law also stipulates that premiums for children with pre-existing conditions who are enrolled during an open-enrollment period cannot be more than twice the standard rate. Families who apply for coverage outside of the open-enrollment periods are not protected against higher rates (Los Angeles Times, 12/23/10).
Children Now, a national children'sÂ rights group, is working with the California Department of Insurance and the Department of Managed Health Care to notify parents of the open-enrollment periods (Colliver, San Francisco Chronicle, 12/30/10).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.