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Insurers Drop Child-Only Plans, Blame Health Reform

Insurers in Texas have stopped offering new child-only policies in protest over a provision of the federal health care overhaul. For children being raised by their grandparents, there are few options left.

Phil and Diann Green at home with their granddaughter Aria, who they've raised since infancy. The Greens, who are retiring and will soon switch from employer-sponsored insurance to Medicare, have been unable to find a child-only health insurance policy for Aria. Insurers in Texas and many other states have stopped offering the policies in protest over federal health reform rules.

Only months from their 65th birthdays and the switch from employer-offered health coverage to Medicare, Phillip and Diann Green of Forney realized they had a problem. After they retire, none of the state’s insurance companies will cover their 12-year-old granddaughter, Aria, whom they have raised since her infancy.

Insurers in Texas and across the nation — protesting a provision of the 2010 federal health care overhaul that prohibits pre-existing condition limitations for children under 19 — have simply stopped offering new child-only policies. For children being raised by their grandparents, who are not poor enough to qualify for Medicaid and have no employer-offered insurance or family plans to cover them, there are few options.

No agency keeps track of how many children in Texas are affected by the elimination of child-only plans, but experts suggest it is in the thousands.

“Raising a child — finding her health insurance — it’s certainly not something you expect at our age,” said Phillip Green, who, along with his wife, gained custody of Aria when she was 7 months old because her biological parents were too young and ill prepared to raise her. “But everybody has come up with an excuse for not taking her.”

Jared Wolfe, executive director of the Texas Association of Health Plans, said it is not because insurers do not want to cover children. The federal health care overhaul, and in particular the pre-existing condition language, has been interpreted to mean insurers must write a policy for any child who applies, he said. That effectively ensures only sick children will apply for benefits, he said — an unworkable financial scenario for insurance companies.

“It’s a bad situation,” Wolfe said. The child-only plans “are a very small percentage of the market, but for those people, it means quite a bit.”

Some states have responded to these insurers with legislation. In Texas, state Rep. Garnet Coleman, D-Houston, has filed a bill that would require insurers participating in the individual insurance market to accept applications from children under 19 — legislation he said mirrors measures passed in California, Kentucky, New Hampshire and Washington.

“We have to correct the market to make sure children don’t go without coverage,” Coleman said.

But with an overwhelming Republican majority in the state Legislature that cannot stand the federal health care overhaul, and which believes the child-only insurance market should work itself out, such a bill appears unlikely to pass.

“Time will tell whether there really is a problem or not,” said Rep. John Zerwas, an anesthesiologist and Republican of Simonton. “If there’s a viable market for it, I would like for it to sustain itself.”

The Greens never thought being retired and having health insurance for their granddaughter were mutually exclusive. As they approached 65, and the threshold for getting on Medicare, the federal health care plan for seniors, they started making all the requisite inquiries to get Aria insured. But in call after call last fall, insurance companies operating in Texas told them they no longer offered new child-only policies — and acknowledged that the family has few choices.

The Greens’ income level means Aria, who is a year ahead of her grade in school and has no pre-existing conditions, does not qualify for the joint state-federal Children’s Health Insurance Program, or CHIP. Nor can she apply for a federal high-risk insurance pool, industry experts say, which requires that a child have some kind of pre-existing condition and receive a formal denial from a private insurance company. (When no plans are offered, insurers do not have to issue denials.)

For now, Aria — who is currently insured through Diann Green’s employer, Wal-Mart — only has one option, her grandfather said: a Cobra plan that costs nearly $550 a month and only lasts for a year and a half.

Officials with the Texas Department of Insurance say they have only heard about the issue anecdotally, but they are looking for ways to entice insurers into selling child-only plans.

Some providers say they are searching for a middle ground. Blue Cross Blue Shield of Texas, which stopped offering child-only coverage last fall, said it is seeking approval from the Department of Insurance for a new child-only policy that would have “benefits and rates appropriate to the new market requirements.”

Phillip Green, who had to take early retirement from his job at Unisys Corporation at age 50 after having a heart attack at 34 and a quadruple bypass at 42, said he has called federal lawmakers about the matter, and they told him it is a state issue. He called his state representatives and was told he should approach the federal government.

“Everyone I talk to about this, their response is, ‘What would you like for us to do about this?’” he said. “I just want them to fix it.” 

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