Pink Fire Pointer Will Health Care Reform Help Sick Children Obtain Health Insurance?

Will Health Care Reform Help Sick Children Obtain Health Insurance?

The health care reform bill recently enacted directly addresses the needs of sick children previously unable to obtain health insurance coverage. Beginning September 23, 2010 insurers must cover children regardless of their health histories. So this should instantly solve the problem facing scores of families - right? Think again.

Every action has an equal and opposite reaction. This is illustrated by what seems to be happening to child only health care plans in many states. Insurers are opting to exit the market, rather than deal with the well documented effects of adverse selection that this new rule imposes.

Adverse selection refers to the fact that sick people will be most motivated to purchase coverage, while healthy people are most likely to drop coverage, or never buy it in the first place. Families with sick children will immediately move to purchase this coverage, driving up loss rates for the insurance carriers. Insurance carriers will then have to raise rates for all, causing families with healthy children to drop coverage. This is a recipe for financial ruin for the insurance carriers.
Insurance companies understand the effects of adverse selection very well, and they are choosing to drop child only coverage. Anthem Blue Cross has announced it will drop child only coverage in 10 states. Effective October 1 of this year, Aetna will drop its coverage in 32 states. Cigna will halt coverage in 10 states.

The unfortunate consequence is that healthy children will be thrown into the same quagmire as currently unhealthy children with no insurance. Many currently healthy children may not get the care needed, and may become sick in the future.

So what are families to do? For families with currently sick children look to publicly funded insurance programs in your state. Also, the newly formed high risk pools may be an option for those uninsured for more than six months. For healthier families, try to find the most affordable family coverage available either through your employer, or in the individual market.

Regardless of your political persuasion government regulation always has unintended impacts. It is difficult to forecast how the child only health insurance market will change over time. Learn how the system works and get covered before getting sick if you can.