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Major health insurers in California to resume offering individual policies for children

The companies abruptly halted the sale of individual policies for kids in September rather than comply with provisions of the nation's new healthcare law. A new state law forced them to change course.

December 23, 2010|By Duke Helfand, Los Angeles Times

California's largest health insurers, fearing they'll lose new customers in the state's lucrative individual insurance market, have canceled controversial decisions last fall to stop selling policies for children.

The insurance companies abruptly halted the sale of individual policies for kids in September rather than comply with provisions of the nation's new healthcare law that required them to accept all youngsters under age 19 regardless of their medical conditions.

Insurers said at the time that the healthcare overhaul could saddle them with huge and unexpected costs, particularly if competitors exited the market. Their decisions prompted criticism from health activists and a spokesman for the Obama administration, who accused them of abandoning children and families.

But a new California law forced the insurers to change course. Beginning Jan. 1, it will prohibit those that abandon child-only coverage from selling new policies in the broader individual insurance market for five years — slicing into profits in a state filled with throngs of potential customers.

On Wednesday, Aetna Inc., Anthem Blue Cross, Cigna Corp., Health Net Inc. and UnitedHealth Group Inc. said they would resume sales of child-only coverage Jan. 1 for an estimated 80,000 children who are not insured through family policies or their parents' employers.

"It's good that the insurers are back in the market, even if they had to be brought back kicking and screaming," said Anthony Wright, executive director of the consumer advocacy group Health Access California. "It will make a big difference for thousands of families."

All the insurers have notified the state Department of Insurance of their intention to resume sales.

"We've let brokers know that as of the 1st, we have plans for child-only policies," said Brad Kieffer, a spokesman for Woodland Hills-based Health Net.

Cheryl Randolph, a spokeswoman for Minnesota-based UnitedHealth Group, said: "We will have child-only policies on Jan. 1.

Anthem, the largest insurer in the individual market, will work with regulators to start selling again "in the best interest of our customers in California," spokeswoman Peggy Hinz said of the Woodland Hills company.

There is plenty at stake. California's private insurance market — where individuals and small businesses buy coverage — generated $17 billion in revenue last year. The market is only expected to grow as millions of uninsured Californians buy coverage, beginning in 2014, through a new marketplace exchange set up as part of the federal healthcare law.

"California offers a significant opportunity for us and we believe we will be highly competitive in this market," Cigna spokeswoman Gwyn Dilday said in announcing the Philadelphia company's decision to resume child-only sales.

The insurers were guarded about their plans in other states. Only one, Connecticut-based Aetna, gave details, saying it would also resume sales in Kentucky, where changes in state law have required the company to rethink its approach.

"We are committed to working with states to address the issues originally raised by the change in federal law in a way that will allow us to participate in these markets," spokeswoman Anjanette Coplin said.

Regulators from the California Department of Insurance have been trying to prod insurers to start selling child-only policies once again since they announced their departure shortly before Sept. 23, when the federal healthcare law would have required them to accept all children with preexisting conditions. On Wednesday, officials sent the companies two pages of "guidance" to help them interpret the new state law.

The officials said AB 2244 requires insurers to offer children's coverage as part of all their policies, not just a select few. And they said parents must apply for the insurance during a two-month open enrollment period that runs from Jan. 1 to March 1, or in the month after their children's birthdays.

Families with sick children that apply during these periods can be charged no more than twice the standard rate. Families that apply outside the enrollment periods are not protected against higher rates.

The author of the state law said he was delighted to hear that insurers would once again offer coverage for children. "The law seems to be having just the effect we intended," said Assemblyman Mike Feuer (D-Los Angeles). "For a family there is little more important than being sure their children have access to health insurance, so I'm very pleased to see these insurers are choosing to make that insurance available."

duke.helfand@latimes.com

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