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Insurance premiums for kids can be based on health, HHS says

By CNN Wires Staff
  • The department is reacting to some insurance companies cutting child-only policies
  • Secretary Sebelius notes "a range of practices" are available to insurers]
  • States also are working on keeping insurance available to children under 19

(CNN) -- The Obama administration is pointing out options -- including charging higher premiums -- that are available to insurance companies reluctant to offer child-only insurance policies under the new health law

Consumer protections built into the Affordable Care Act that took effect less than a month ago say that all employer plans and all new plans in the individual market that offer polices for children age 18 and younger are prohibited from denying coverage to children who have pre-existing conditions. But the law also does not force insurers to offer policies for children.

Faced with uncertainty about the impact of the law, and concerned that some parents would not enroll their children until they got sick, "some insurers have decided to stop writing new business in the 'child-only' insurance market," Secretary of Health and Human Services Secretary Kathleen Sebelius said in a letter to the National Association of Insurance Commissioners on Wednesday.

To counter this, Sebelius wrote, "we have clarified that a range of practices related to 'child-only' policies are not prohibited by the Affordable Care Act."

One of the practices that is allowed, she said, is charging higher rates based on health status "as permitted by state law."

She noted that her department had rejected insurers' request that they be allowed to "accept year-round those applicants who are healthy, while restricting access for children with pre-existing conditions to a time-limited open enrollment period."

Allowing the insurers to set higher premiums based on a child's health would help them limit the costs of having to accept children with pre-existing conditions and would provide an incentive for parents to enroll their children earlier.

Sebelius also noted in her letter that many states have either passed or are working on measures to address potential problem areas, and she encouraged states "to take whatever action they can ... to preserve options for children to obtain coverage regardless of their health status."

She also wrote that rules can be implemented, "consistent with state law, to help prevent employers from encouraging workers to enroll children in child-only policies instead of employer-sponsored insurance."

"The Affordable Care Act was designed to ensure that Americans who need health insurance are no longer denied access to the care they need -- and that includes the youngest and most vulnerable Americans," Sebelius said in the news release. "We have been working closely with the states in their role as insurance regulators and with insurance companies to find ways to improve access to coverage for America's families."

Robert Zirkelbach, press secretary for America's Health Insurance Plans, the national association representing health insurance providers, said last month that, "while well intended, the current regulation provides a powerful incentive for parents to wait to purchase coverage until after their children become sick."

Child-only policies are an option for those whose employers don't offer family coverage or who don't want to or can't afford to buy insurance for the whole family.

In her letter, Sebelius noted that the need for special measures will change in 2014, when, under the Affordable Care Act, "the new health insurance exchanges will begin to offer affordable options to children and families, banning all discrimination against all Americans based on health status."