Tag Archives: child-only policies

State regulations force insurers out of market, Obamacare will make it worse

From Grace-Marie Turner at the Galen Institute:

Health plans across the country are leaving the small group and individual health insurance markets, forcing people to find other sources of coverage. In this paper, we provide examples of how millions of people in dozens of states already are being negatively impacted by the law — from New York to Colorado, Virginia to Florida, and Connecticut to Indiana.

The paper provides an overview of carriers leaving the market; the impact of Obama administration rules on the child-only health insurance market; the disruptions caused by rules governing health premium payouts and “grandfathering;” and the threats to the Medicare Advantage market. …

Some insurance carriers are leaving the market because of onerous state regulations, others are victims of a faltering economy, but the cascade has been accelerated by the rules that already have taken effect and the many more that are to come as a result of ObamaCare [HR 3590].

Read more: A Radical Restructuring of Health Insurance, by Grace-Marie Turner Galen Institute.

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Filed under insurance, tax code, HSAs, Policy - National, regulation

SB 11-128: Colorado government compels insurers to sell plans to kids

Ed Sealover of The Denver Business Journal reports:

Colorado insurers offering individual health policies to adults will be required to offer them to children as well on Aug. 1, according to an order issued Thursday by the Colorado Division of Insurance.

The emergency order follows Gov. John Hickenlooper’s signing on Friday of Senate Bill 128, which mandates that any company offering adult individual health policies must offer them to children. …

Federal health care reform [sic] required that, beginning in September 2010, insurers must offer policies to all children, regardless of whether they have pre-existing conditions, if the insurers sell any child-only insurance. Rather than comply with what they called a costly mandate, many chose to leave the child-only market, a relatively small market typically used by unemployed or uninsured parents who want coverage for their children but not themselves.

The whole article is here: Colorado issues emergency order on child health coverage.

What Sealover, and other journalists fail to mention is that insurers need not only issue policies too all the apply (“guaranteed issue”), but do so at the same price, regardless of the applicant’s health risk (“community rating”).  Economist John Goodman describes a downside of this:

Plans … profit on healthy enrollees and suffer a loss on less healthy enrollees.”  Insurers “have strong financial incentives to attract the healthy and avoid the sick.  After enrollment, their incentives would be to over-provide to the healthy (to retain their membership and attract more of them) and under-provide to the sick (to discourage their continued membership and repel others just like them).

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Filed under Colorado health care

Colorado Consumer Health Initiative misleads again

A couple weeks ago Dede de Percin of the Colorado Consumer Health Initiative repeated the cost-shift fallacy that people use to justify mandatory insurance.   Now she claims last year’s health control bill makes it illegal for insurers to drop coverage when policy holders get sick.  But that’s been illegal for years. The Denver Daily News reports:

Dede de Percin, executive director of the Colorado Consumer Health Initiative, which heavily supported health care reform, pointed to several immediate effects Coloradans would feel if a repeal went through.

“I don’t think anybody really, really wants to go back to the days when kids with pre-existing conditions were denied coverage, when companies canceled policies the moment people got sick, when there were no protections for egregious gouging of premium increases — none of that was good,” said de Percin.

Ms. De Percin leaves out some important details.

Regarding children with pre-existing conditions, the health control bill (HR 3590) mandates both guaranteed issue and community rating. That is, insurers have to issue policies to everyone one, and at the same price, regardless of the applicant’s health risk.  This is like forcing Geico to charge a mom in a minivan the same rate as a 19-year-old guy with a sports car. In short, in encourages insurers to design policies that sick people don’t want, and act like slumlords. Also, Ms. De Percin does not mention that at least five Colorado insurers have stopped selling child-only policies because of this mandate.

Regarding insurers’ canceling policies when people get sick, guess what?  Dropping coverage in this way has been illegal since 1997.

And regarding “protections for egregious gouging of premium increases,” typically competitive markets protect against that. But since you’re not able to buy policies available in other states, and the tax code binds you to the few choices your employer offers, insurers are very much shielded from competition.  Thanks, politicians!

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Filed under Colorado health care, myths & fallacies

Health insurance takeover alert: Insurers selling different products

The Denver Business Journal reports on what might be the first signs of government’s forcing out its competition in the health insurance business:

Colorado health insurers are diversifying their product offerings, selling policies outside of the health realm — such as workers’ compensation and life insurance …

In addition, national insurers recently have purchased non-insurance businesses, such as health clinics and electronic health information technology providers — also to increase their revenue base.

Colorado insurers began easing into new products in the last couple of years. But passage of federal health care reform last March sped up the pace.

Company executives say the timing isn’t coincidental, as new regulations are expected to cut into profit margins, making new sources of revenue and more efficient services even more important.
One new regulation, for example, requires that insurers spend at least 80 percent of health care premiums collected from small business plans on medical care rather than administrative costs. That number rises to 85 percent for large business plans.

This political control (“regulation”) is known as the medical loss ratio. For why this is a bad idea, see my previous posts:

Recall that in response to the health control bill [HR 3590], some Colorado insurers have stopped selling child-only policies because otherwise they’d have to charge the same rates to everyone regardless of risk. State Senator Morgan Carroll wants to force insurers to sell them.

If you think it’s alarmist to suggest the politicians backing the health control bill [HR 3590] want to use authoritarian methods to create a government health insurance monopoly, recall that (1) the proponents of the “public option” want a government monopoly, and that (2) characterizing the health control bill as a government takeover is surely not 2010’s the “lie of the year.”

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Filed under Colorado health care

Morgan Carroll wants to force insurers to sell child-only policies

Update to CO insurers stop selling child-only policies – blame health control bill:

The Denver Business Journal reports:

State Sen. Morgan Carroll is warning insurers in Colorado to return to the child-only individual health care market or face a “very good” chance she or another Democrat will introduce legislation come January compelling them to do so.
Summary of this issue:  The federal health control bill (HR 3590) requires insurers to sell child-only policies to all parents who want them, at a price that does not reflect the kid’s health status. These insurance price controls are known as “community rating.”   This means parents could wait until the child is sick to buy the policy.  In attempt to remedy this, the Colorado Division of Insurance has ordered two month-long open enrollment periods each year, so parents could not enroll whenever they want.
Even if this is effective, it’s bad news for sick kids with child-only policies.  Since the price controls prohibit the insurers from risk-rating premiums, they lose money whenever they sell a policy to a child with a pre-existing condition correlated with expensive claims in the future.  So insurers respond by trying to attract the healthy and avoiding the sick.

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Filed under Colorado health care

Will Colorado “hammer” insurers into selling child-only policies at a loss?

Update to: CO insurers stop selling child-only policies – blame health control bill:

“It’s strictly information-gathering, as far as I’m concerned — no hammers, no nails.”
— State of Colorado Insurance Commissioner Marcy Morrison on her meeting with insurance companies about their decision to stop selling child-only policies because of insurance price controls.

From the Friday September 17 Denver Business Journal:

Anthem Blue Cross and Blue Shield of Colorado, the state’s largest individual-market health-care provider, announced Friday that it will stop selling new child-only individual policies on Sept. 23 because of uncertainty created by new federal mandates.

The company becomes the sixth major insurer to confirm that it is pulling out of the child-only individual market in the past 2-1/2 weeks, including four of the state’s six largest individual insurance providers.

The day before, the DBJ reported (emphasis added):
Colorado Insurance Commissioner Marcy Morrison has called a meeting of the state’s individual-market health insurers for Friday to address the number of companies that are dropping child-only individual policies rather than conforming to increased federal mandates on those plans. …

“It’s strictly information-gathering, as far as I’m concerned — no hammers, no nails,” Morrison said.

But when asked whether the state could do anything to require insurers to offer such policies — a question that Jo Donlin, director of external affairs for the Colorado Division of Insurance, answered early this month with a “no” — Morrison instead offered no comment.

“That’s the $64,000 question,” she said. “I just know I want to hear from them. I have no comment now on whether the state can do anything.”

“No hammers, no nails”?! Gosh, sure sounds like she has them with her and is prepared to use them.

As I’ve noted in “Get Ready for Health Insurance Slumlords,” if insurers are forced to sell the policies, they will design them to make them unappealing to those with pre-existing conditions anyway.

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Filed under Colorado health care

CO insurers stop selling child-only policies – blame health control bill

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.

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Filed under Colorado health care