Parents who don’t have health insurance buy individual policies for their kids but five health insurance companies in Colorado will no longer offer that kind of coverage. The insurers say offering child policies made business sense when they could just cover healthy kids but that since federal law now requires them to offer insurance to all kids, including kids with pre-existing medical conditions, they are withdrawing from their child-only plans.
Insurance executives told the Denver Business Journal Friday that insurers who stay in the individual child market will be at a “competitive disadvantage” because after September 23rd they will be forced by federal law to provide for the “influx of children needing costly disease treatment.” There is no state law that requires insurers to offer the child-only policies. The companies who have fled the market include Humana, Aetna, Cigna, Assurant and United Healthcare of Colorado.
A Colorado Division of Insurance director, Jo Donlin, said the division is watching to see how access to insurance in the state is affected before commenting on the withdrawals.
The Business Journal reported that the child-only market makes up only 2 percent to 5 percent of sales annually.
Executives seemed to suggest that the government has in effect provided half a mandate, that if it is going to require all insurance companies in the market to offer all children coverage, it should also require all companies to enter the child-only market to spread out costs and erase the problem of competitive disadvantage.
“We regret having to make this change, but writing child-only policies is feasible only when there are a number of other insurers willing to do the same,” Jim Turner, corporate spokesman for Humana, told the Journal.
He said that the administrative costs of the policies are also not as well covered because there are few people in the lower-cost child-only market and new laws require that 80 percent of the price of an insurance plan pay for actual medical care.
Parents without insurance who have sick kids and who hoped for relief this fall may have to continue waiting.