Health plans for children stalled despite new federal law

  • Article by: CHEN MAY YEE , Star Tribune
  • Updated: October 6, 2010 - 10:04 PM

New health law was supposed to make insurers take on sick children, but it hasn't been that simple.

Most health insurers in Minnesota have yet to write new individual policies for sick children, despite requirements under the new federal health care law that aimed to start such coverage two weeks ago.

The policies for children -- one of the few uncontroversial areas of the new law -- were supposed to be available starting Sept. 23. But rather than offer individual plans that might attract mostly kids who are already sick, and thus expensive to cover, insurers have cut off or reduced their offerings of individual policies.

HealthPartners, the state's No. 3 insurer, suspended outright all sales of new individual policies. Blue Cross and Blue Shield of Minnesota, the state's biggest insurer, stopped selling all new individual policies for a day, then put them back on the market, minus child-only policies.

Other states have found a way around the problem: implementing a common enrollment period once or twice a year, so parents can't wait till their kids get sick to apply for insurance. But in Minnesota, where Gov. Tim Pawlenty has vowed to have minimal involvement with the federal health care law, regulators initially appeared headed that way, then backtracked.

That's left that part of the law essentially toothless in Minnesota, at least for now.

"There is not a lot of demand for child-only policies," said Jim Koppel, executive director of the Children's Defense Fund-Minnesota. "But the people stuck in these situations are still stuck in these situations. It sure would be nice to move on."

Only about 5 percent of Minnesotans get their insurance through the individual insurance market, with most others getting coverage through employers or government plans. But while there may not be a large number of under-19 residents clamoring for insurance, insurers say taking all comers exposes them to risk.

Child-only plans might be attractive to families without health coverage whose child becomes ill, or to those whose employers charge much more for full-family coverage than just to cover an employee.

Without a common enrollment period, "the first one out the chute has the most risk," said Marcus Merz, chief executive of PreferredOne, a small insurer. "They get all the pent-up demand."

Julie Brunner, executive director of the Minnesota Council of Health Plans, the group's trade association, said the best solution is a clear lead from the Commerce Department.

"What Commerce could say, in order to meet the objectives of the federal law and provide a rational way for families with children to understand this, is recommend that plans have a common enrollment period," and name a month or two months in a year, Brunner said.

The insurers can't decide that among themselves because that could violate antitrust law.

Action elsewhere

In some states, regulators have responded swiftly.

Kentucky's insurance commissioner is ordering insurers to show up at a hearing this month to explain why they stopped selling child-only policies. In Colorado, the insurance commissioner last month announced emergency regulation to establish mandatory open enrollment periods for child-only policies, through Oct. 31.

Minnesota Department of Commerce spokeswoman Nicole Garrison-Sprenger said the department is aware that other states have taken action. But Garrison-Sprenger said it is up to the insurers whether they want to sell child-only policies, when to hold enrollment periods, and whether they want to seek approval for new products or new rates.

"If that is their decision," she said, "we are ready to review those new filings."

Throughout the summer, health plans and regulators worked overtime to get insurance policies amended to comply with a slew of new provisions that kicked in Sept. 23. These included extending coverage to dependents up to age 26 and doing away with annual maximums.

As recently as the beginning of September, Commerce Department officials told state legislators they would recommend a common enrollment period for kids, according to Sen. Linda Berglin, DFL-Minneapolis. Rep. Tom Huntley, DFL-Duluth, said he also was briefed by Commerce officials who said they were working to smooth the law's rollout.

But after Pawlenty's staff had a word with them, the Commerce Department did a U-turn.

Pawlenty spokesman Bruce Gordon put it this way: "After consulting with Commerce, it was determined companies can currently offer these policies, requiring no further direction from Commerce."

The Republican governor, who is mulling a run for president, has made no secret of his opposition to the federal health care law. In late August, Pawlenty announced an executive order designed to keep what he terms "Obamacare" out of Minnesota.

Pawlenty told all state agencies to funnel their federal grant requests through his office to "stop Minnesota's participation in projects that are laying the groundwork for a federally controlled health care system" -- unless they are required by law or approved by his office.

The announcement drew unusually sharp criticism from the heads of the Minnesota Council of Health Plans, the Minnesota Hospital Association and the Minnesota Medical Association, who said in a joint statement that "the governor's decision just doesn't make sense for Minnesotans."

Said Berglin: "The governor is trying to throw as much sand in the gears as he can."

Confusion prevails

When Sept. 23 arrived, the insurers' responses were all over the map.

Blue Cross, which underwrites most individual policies in Minnesota, has suspended sales of all new child-only policies pending further guidance. The insurer's family policies cover "the vast majority" of needs, said spokeswoman Pam Lux.

PreferredOne has also stopped sales of child-only policies.

Medica, the second-biggest insurer, continues to sell individual policies, including child-only ones. However, it has set mid-November to mid-December as its open enrollment period for child-only policies, when no child who applies will be denied. Outside that period, Medica reserves the right to reject children with pre-existing conditions.

Sales of all new HealthPartners' individual policies remain suspended, except for short-term policies.

Consumer groups say they are outraged by the foot-dragging over what should have been a simple part of the health law.

"They're simply holding kids hostage," said Ethan Rome, executive director for Health Care for America Now!, a national pro-health-reform coalition of about 1,000 community and labor groups.

Chen May Yee • 612-673-7434

  • ABOUT THIS SERIES The sweeping health care bill signed by President Obama in March -- the Patient Protection and Affordable Care Act -- is the biggest overhaul of American health care in decades. It will expand insurance coverage by 30 million people, tighten consumer regulations, update Medicare and eventually require almost everyone to obtain health insurance -- but it will be phased in gradually between now and 2014. "Health Care/The NewLandscape'' is an occasional series by Star Tribune reporters describing the new law as it takes effect.
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