Tennessee’s biggest health insurer will quit selling new child-only health insurance for individuals next week, joining an industry exodus from such plans because of new requirements not to exclude children with costly pre-existing conditions.
The decision by BlueCross BlueShield of Tennessee to drop new individual coverage for children next Friday will leave some parents without any option to buy private health insurance for their children in Tennessee.
BlueCross spokeswoman Mary Thompson said the Chattanooga-based health insurer couldn’t afford to be the only provider of such policies following early announcements by Cigna, Aetna, Humana and United Healthcare that they also were dropping individual child-only plans in Tennessee.
The largest health insurer in the country — WellPoint Inc., which operates BlueCross plans in Georgia and 13 other states — also stopped offering new child-only plans this month rather than comply with rules that began Thursday to require insurers accept children with pre-existing medical conditions.
“We just couldn’t accept the risk of being the only one in the state offering these plans,” Thompson said. “It’s just not financially sustainable to have only the sickest people coming to your health plan and not balancing those folks out with healthier people in the plan.”
Thompson said BlueCross’s decision affects a relatively small population and is needed to keep costs down for all policyholders
Family coverage available through employer plans and the state’s TennCare and CoverKids programs will continue to provide health insurance for most Tennessee children. BlueCross, Cigna and other insurers said they will continue coverage for existing customers.
Singing the blues
But a consumer advocate blasted BlueCross for “putting its profits ahead of the needs of some children” who could be left without the ability to get coverage, at least until other insurance mandates and changes begin in 2014.
“I think it’s very disappointing that BlueCross BlueShield, given its enormous reserves, market share and favored status in Tennessee, does not feel any more responsibility as a corporate citizen [than[ to leave these families in this predicament,” said Gordon Bonnyman, executive director for the Tennessee Justice Center, a nonprofit group that often represents low-income and sick Tennesseans.
BlueCross, Cigna and other health insurers offering child-only plans said current customers will continue to be covered. But the new ban on insurers being able to exclude children with pre-existing conditions could have the unintended effect of encouraging parents to buy health insurance for their children only when they are sick, injured or facing serious illness.
“There seems to be a domino effect among the insurers,” said Paula Wade, an industry analyst for HealthLeaders-InterStudy in Nashville. “The reason they are doing this is because the health reform law requires any company offering child-only coverage to offer it regardless of pre-existing conditions. They simply don’t want to take sick children on to their rolls when they fear many families with healthy kids will forego coverage until their kids get sick.”
Cigna wants risks shared
Cigna spokeswoman Gloria Barone said Cigna will no longer offer new child-only policies “to help keep costs affordable” for others who are insured.
“Cigna supports an insurance market that provides broad access and coverage choices in order to keep family coverage affordable for as many people as possible,” she said.
Barone said Cigna “could reconsider changing this position as market dynamics change.”
By 2014 under the health reform plan adopted this spring by Congress, all Americans will have to buy insurance to help spread the risk and limit such adverse selection.
The new law tries to allay such concerns by allowing children to sign up for coverage only during a fixed annual enrollment period. That is designed to discourage parents from waiting until their child gets sick before they buy coverage.
But Robert Zirkelbach, a spokesman for the industry trade group America’s Health Insurance Plans, said there’s no set time of the year for all insurers to hold open enrollment like there is for Medicare Advantage plans. That means parents can still wait until their child becomes ill and then shop around for an insurer that happens to be holding open enrollment. Those customers then will generate more in medical claims than they contribute in premiums, and that could ultimately raise the cost of insurance for everyone else.
Wade said she is unsure if the insurers’ move to drop new child-only plans is also a political move to highlight industry concerns over the new health plan prior to the Nov. 2 midterm congressional elections.
Republican lawmakers say they want to repeal what they label as “Obamacare.”
Options for care
In the meantime, Thompson stressed that parents have options to enroll in family plans, if provided through their employer or through TennCare for low-income families and CoverKids for middle-income families, or a parent can buy an individual plan and add their child as a dependent.
Gov. Phil Bredesen launched CoverKids in 2007, using matching funds from the federal Children’s Health Insurance Program. Families with incomes up to 250 percent of the poverty rate — up to $55,125 a year for a family of four — may sign up for CoverKids with no premiums. Higher income families denied other coverage may sign up for the program at a monthly fee of $239.
Joe Burchfield, a spokesman for Cover Tennessee, said the program insured 45,597 children in August from families with income too high to qualify for TennCare but not otherwise able to get health care coverage. In the current year, the state expects to spend $40.8 million to insure children in the program up through age 19, matched by $130 million from the federal government.
By comparison, more than 750,000 Tennessee children are enrolled in TennCare.
“We’re a small but important piece of the overall pie, and we are not expecting any huge influx of enrollment in the program because of these other changes (from private insurers dropping child-only plans),” Burchfield said.
The Associated Press contributed to this report.
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