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Insurance Companies Dump Kids' Coverage! WTH?!

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momlogic's Vivian: So much for doing right by this nation's children: When Obama's law barring insurance companies from denying coverage to kids with preexisting conditions goes into effect, some health-insurance companies will respond by denying children, PERIOD. This latest d-bag move is a total outrage!

health insurance form

The L.A. Times has revealed that, rather than abide by Obama's new federal healthcare law (which requires insurers to cover children under 19, regardless of whether or not they have preexisting conditions), major health-insurance companies in a bunch of states have announced their intention to stop selling health-insurance policies for children altogether. (Kids with current child-only plans and those covered through their parents' jobs will remain covered.)

This means that Anthem Blue Cross, Cigna, Aetna and other companies in heavily populated states like California, Illinois, Florida and Connecticut could potentially hose as many as 500,000 kids. Insurance companies are countering with explanations and justifications about the potential "massive costs" they'll incur if they comply with Obama's new law. They say parents might start buying policies only after their kids get sick, and that as a result, many insurance companies will have to close shop, leaving just a few to foot the big bill. This in turn may leave parents with no recourse but to enroll their children in public insurance programs such as Medi-Cal.

Of this sucky turn of events, White House Press Secretary Robert Gibbs said, "It's obviously very unfortunate that insurance companies continue to make decisions on the backs of children and families that need their help." The Obama administration has suggested that insurers could compromise by making child-only policies available during "designated enrollment periods."

Gwyn Dilday, a spokeswoman from Cigna, said, "We made a decision to stop offering child-only policies to ensure that we can remain competitive in the ten markets where we sell individual and family plans. We'll continue to evaluate this policy and could reconsider changing this position as market dynamics change."

This crap, after these same companies said they'd overlook the loophole in Obama's law that makes this whole thing possible. (It says an insurance company can't write a policy that excludes coverage for preexisting conditions, but doesn't say anywhere that a child can't be rejected completely.)

Such an ugly display of corporate opportunism -- not to mention horrible PR. Half the American population has children under 18. Who in the world would buy an insurance policy from a company that screws kids out of coverage?

What do you guys think?

next: How the First Nine Months Shape the Rest of Your Life
60 comments so far | Post a comment now
Russell September 24, 2010, 11:13 AM

Before you dismiss me please hear me out first. Car insurance companies are allowed to sell across state lines and across regional lines which helps to keep car insurance lower by making the market competitive and when the consumer has more choices then prices have to fall in order for each company to stay competitive with each other.

Health insurance companies however, do not have the same luxury that car inusurance and other companies have. The free market does not exist for health insurance companies. Health insurances have a region that are mandated to stay within. Leaving the consumer either with no choice or very little choice. Which means higher rates, very limted deals and because they are the only horse in town, they can do whatever they want to do and there is no recourse for the consumer.

With car insurance, if I no longer like the deals at State Farm and Progressive comes along promising a better deal then I can switch companies and if enough people switch away from State Farm and then State Farm has to start giving their consumers better deals so they can get new and keep existing customers.

With health insurance companies there is no such recourse for the customer. We cannot thank the health insurance companies for this but rather we can thank the state and federal government for this lack of free choice.

Now, with the federal government passing the new health care laws, the perfect storm has now been created. Health insurance companies really cannot afford to take not only children but adults with pre-existing conditions because there pool of clients is limited by their region and people with pre-existing conditions because the insurance company will be paying out more then they are taking in. More spending and less income means they will go bankrupt. It is the same reason why if you have too many car accidents your carrier will drop you.

Health insurance companies need 5 healthy people paying for insurance to help supplement one person with a pre-existing condition. With the mass influx of people with pre-existing conditions will be too much for the health insurance companies to handle.

Which is why the new health insurance laws will eventually bankrupt all of our nations insurance companies and eventually all of us will be on the, “public option.”

Don’t blame the health insurance companies for trying to make money while operating within the laws. Blame the law makers.

Matt September 24, 2010, 11:44 AM

Dear Russell, don’t blame the lawmakers just because you’re a tea party nut job who thinks religion should rule the free world.

XXXX September 24, 2010, 11:47 AM

Blame everyone who voted for Obama. It’s his fault!

Anonymous September 24, 2010, 12:16 PM

Obama should not have made any laws regarding health care to begin with. It’s not the country’s job to insure the children -it’s the parents. If you couldn’t afford insurance you shouldn’t have children - period. BUT everyone decided no, the government is responsible for our kids and now this is the crap we get!

Russell September 24, 2010, 12:38 PM

OK, Matt where did I mention religion in my statement? Where did I mention the, “Tea Party?” You don’t know my religious belief or political party.

XXXX, did I blame Obama? No, I believe I mention this problem pre-dates Obama, while it is true Obama has made it worse but it’s not entirely his fault.

Kristen September 24, 2010, 12:56 PM

Why is this at all surprising? Insurance companies’ decisions not to cover children with pre-existing conditions are based on financial risk, just like 99% of any corporation’s decisions. It’s the nature of the beast when dealing with an entity beholden to shareholders. It’s not wrong or evil… it’s just reality. The same reality that provides jobs for so many of us.

So where will the money come from, once this law goes into effect, to cover these risks? From the secret corporate piggy bank stashed with billions of unallocated dollars? From the CEOs? Seriously, people? It’s going to come from the rest of their paying customer base, or these children aren’t going to be covered at all. Are you all willing to step up and pay these huge costs out of your pockets? Who has the extra money laying around? This is the least surprising thing you should have read all year.

Pamala September 24, 2010, 6:09 PM

I have to wonder, as an insurance agent, why the health insurance system is unregulated. If it was regulated in the way homeowners/life/auto was I think things would be a lot better.

And how the concept of a larger pool of people the more money you make is lost on these companies is besides me.

Curtis Philips September 24, 2010, 7:34 PM

I have to think that people like Russell, XXX, and ‘Anonymous’ must be miserable SOBs who want others to suffer as much as possible, maybe to make them feel their lives aren’t quite as empty.
*About state lines, the health insurers have *fought* against crossing state lines because they *don’t want* to compete. They have essential monopolies or cartels in most states and like it just fine.
*Don’t have kids if you can’t afford them. Yes, that’s true, but who said costs would go up 25 to 39% every year, compounded? When earnings are going down, down, down? Must parents be psychic about the next 18 years of the economy?
*Blame Obama. Sure, why not, he’s black. But I will blame him to the extent that he tried to make accommodations with the Republicans. Obama’s problem is that he wasn’t tough enough. He didn’t take the mandate for change and eliminate the middle men, the insurance companies, completely. They serve no purpose but to make profits by denying health coverage to sick people. There is a special place in Hell reserved for these CEO’s, I’m certain. Letting people die is their whole business model. What Obama should have done is leave the sorry mess as it was, but also permit anyone to buy into Medicare at any age, but paying for it not getting it free like retired people. The fools that think things are great the way they are can keep paying Anthem, and those with a brain can sign up for a single payer system. Medicare has big problems in funding, but these optional enrollees would pay for their services, but only for their services, not an extra 40% a year for a health company’s profits and obscene payments to their CEOs. So like Clinton didn’t have the guts to let gays be in the military openly, it’s taken over ten years to be about to wipe that out. And maybe it will be another ten years before Obama’s failure of courage will be corrected by making health care part of what we get BACK for the taxes we pay. Imagine very citizen being born with health care paid out of our income taxes. Imagine businesses being able to hire people and compete with businesses in countries where government and not business pays for health care. Imagine not ever having to make a health payment or write a doctor’s check and not having to be afraid of you or your child getting sick and dying in the world’s (once) richest country. Other people around the world live every day of their lives that way, not afraid to find a new and better paying job because they’ll lose their health coverage, or to start a new business on their own and get rich, not ever having to think about “But what about my health insurance?” But no, we’re Americans, we believe in rugged individualism, so we let pantywaisted CEOs rob us blind and literally kill us as if we were worshiping John Wayne himself. And all the little cowboys and cowgirls vote Republican to get government out of their lives, just what the fat cat Republicans want to do: Take all the working people’s money and spend it on rich Republicans and CEOs and let the little people work crappy low paying jobs and support the banks and the rich and health insurers with their taxes. Wake up America, the enemy is not Obama, it’s Anthem [my insurer].

Kate September 25, 2010, 6:58 AM

I am a Insurance agent in the State of Florida, and I don’t think the Insurance companies had any choice at all. The way the Obama Health law is written, a Mom could be in a Ambulance on the way to the Hospital with a child and call a Insurance company and get insurance on that child. Then cancel it as soon as the bill is paid.
Do you think that is Fair?

Mary September 25, 2010, 10:08 AM

Disclaimer: I don’t work in insurance or the health industry, but I do own a small business.

For me to remain in business - aka, continue providing service to my customers - I have to try to keep costs down. My customers choose to use me. They don’t have to.

If a bill passed that meant that (1) my customers HAD to buy my services AND (2) I HAD to serve them, no matter what - I would go out of business.

In short -
A. Health insurance is one of many options for receiving medical care when it’s needed. A family could also start a savings account for the purpose of being prepared.
B. Forcing Americans to purchase a product/service, and forcing private industries to provide said product/service - it violates rights.
C. For a matter this important - it would have been much more beneficial all around to TRY the suggested solutions of competition across state lines, or capping how much “damages” medical professionals could be sued for (because this means exorbitant insurance premiums for them, which is passed on to patients and their health insurance companies).

Health care reform does need to happen. But what this legislation means for my business - is that by 2016 I’m going to need to find a new job, because the requirements put on small and large businesses is too great. And for someone who went into business on my own because I wanted to support my family and be a work-from-home mom - this really sucks.

Deb September 25, 2010, 9:20 PM

Consider me one of the statistics…my 6 year old daughter will lose her insurance coverage next month. I had planned to get her a child only policy but that is now not available. I am a school teacher and a single mom. I can’t afford to insure her through my work because the family plan at work will cost me about $860 per month…(roughly a third of my pay)…. I make too much for her to qualify for the state children’s insurance plan….so my healthy 6 year old daughter is essentially uninsurable. Most parents who seek child only plans are in the same boat I am…they are not out to screw the companies they just want to find affordable insurance for their children. With the small market of child only policies the claim of insurance giants that it will affect the bottom line is hogwash….they just want to throw a monkey wrench in the health care debate. I hope our government steps in and fixes this problem.

Brian September 26, 2010, 1:36 PM

Let’s clear up some misconceptions.

Insurance companies CAN compete over state lines. Cigna and Aetna sell policies in practically all 50 states right now. There is nothing stopping Humana or Anthem or Kaiser from selling policies in other states. They simply have to abide by the state laws. There is nothing in health reform that stops insurance companies from selling insurance in one state over the other. It’s the insurance companies choice.

Second, a mandate to buy insurance is nothing more than making individuals responsible for their own health care. Right now, if you do not have insurance and go to the hospital, the hospital HAS to treat you if it is an emergency. The hospital can bill you, but they may never get paid. How is that fair? Then those that have insurance have to pay higher premiums in order to help the hospital make up the lost costs.

And the insurance companies can choose to implement an enrollment period for children’s insurance to keep people from buying insurance until its needed. If you can only buy insurance once a year, then guess what…you’ll either buy it or take the risk yourself.

Finally, for those of you who think that “obamacare” is socialist, what do you think insurance is? Anyone who buys insurance is paying into a pool that only pays out to those who need it. The very defintion of socialism!!

michelle September 27, 2010, 10:28 AM

As an economist I think Curtis and Brian have it the most correct. Suggesting with a straight face that the solution is to allow “competiton across state lines” is really an attempt to keep things exactly the same (which I think is what the Republicans really want anyway). And health savings accounts — how does that make sense if average incomes are going down (on a real basis) and health care inflation is 25%+ a year? We need national single payer health care, asap, or we just continue our slide into the 3rd world. I don’t understand what boogey man people are so afraid of. Grow up.

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