A new law regarding health insurance in California has inspired several insurance companies to reconsider their decision to stop selling individual health insurance policies for children. The insurance companies are concerned about losing customers in 2011 due to this new law. California consumers, especially those who have uninsured children, are going to benefit as a result of the new law.
You might recall that in September of 2010 several insurance companies decided to suddenly stop selling individual health insurance policies that were designed to cover children. At the time, a law was taking effect that stated that insurance companies were no longer allowed to refuse to cover a child who had a pre-existing condition. Many of the larger insurance companies, including Aetna, Cigna, and WellPoint, felt that this requirement would end up costing them too much money.
So, rather than comply with the new law, they elected to cease selling individual health insurance policies for children altogether. This controversial act was an unexpected result of the Affordable Care Act, and was highly criticized in the media, as well as by several government officials. In short, it seemed that these insurance companies were saying that they believed that it was more important to protect their own profits than it was to protect the health of sick children.
A new law in California has caused many insurance companies to reconsider their original decision. Starting in January of 2011, insurance companies who abandoned their child-only coverage will be prohibited from selling new policies in the (much larger) individual health insurance market for five years. In other words, this law is going to hit insurance companies where it hurts, in their profits.
Suddenly, insurance companies like Aetna Inc., Anthem Blue Cross, Cigna Corp., Health Net Inc., and UnitedHealth Group Inc., have been pointing out that they are going to resume sales of child-only coverage starting January 1, 2011. It has been said that these insurance companies have been brought back “kicking and screaming” into the market. This will benefit the parents of an estimated 80,000 children in California who are not covered by any form of health insurance right now. The new law seems to be having the desired effect in California. Perhaps other states can adopt similar laws, to help the uninsured children in their states.
Image by Alexandru Pănoiu on Flickr