The Denver Business Journal reports:
At least five Colorado insurers will stop selling new individual health insurance policies for children by Oct. 1 because of soon-to-be-enacted federal mandates [from HR 3590 – BTS] requiring them to cover all applicants under age 19, including those with pre-existing medical conditions.
…this action by several major companies, including three of the top six providers of individual accident and health insurance in Colorado, portends what could be even more major changes coming from insurance companies because of the recently passed federal health care reform law. …
A few months ago I warned to Get Ready for Health Insurance Slumlords, as when insurers are forced to insure high-risk people at the same premiums as those with low risks, they respond by designing their products and services such that high-risk customers do not want them. Or they can stop selling the product, as is the case here.
The DBJ article continues:
Most children receive health insurance as dependents on their parents’ plans or through publicly funded plans such as Medicaid. But parents who lack insurance themselves sometimes buy policies for their children. Those children are who could be affected most by this decision.… Jim Turner, corporate spokesman for Louisville, Ky.-based Humana, said … . “In addition, the cost of administering child-only policies makes it exceedingly difficult to meet new standards [medical loss ratios – BTS] that require at least 80 percent of premium be spent on medical care.
Child-only policies typically have lower premiums, with no other family members to contribute additional premium that might help offset administrative costs.”
… Dede de Percin … predicted that the decision to stop writing kids-only policies could sully the reputation of the companies and cost them business.
“It doesn’t portray them in a very good light in terms of their commitment to families or community,” de Percin said. “It definitely assures gaming the system and trying to get around the regulations of the affordable care act, and it’s a shame that they’re taking it out on kids.”
This argument is despicable. She’s using “for the children” argument to push an agenda the forces businesses to act according to a politicians’ judgment, and not their own. Insurers are not charities, and people do not buy insurance for the purpose of giving to charity. Is really “gaming the system” to stop selling products that lose money or make your products more expensive?
“The system” she refers to is the one politicians have imposed on us, which is responsible for expensive non-portable insurance in the first place.
See also David R. Henderson’s post at EconLog: Unintended, but Totally Predictable, Consequences.
