OSPIRG Urges Regence to Reconsider Kid Policy

But Regence stands by its earlier decision and will not offer new individual policies to children under 19
September 28, 2010 -- OSPIRG, which takes on powerful interests on behalf of Oregonians, has asked Regence BlueCross BlueShield to reconsider its decision last week to stop covering new childrenon individual policies.
But Regence is not changing its decision, said Samantha Meese, spokeswoman. “For almost 70 years, Regence has provided health insurance to thousands of children and families in Oregon. Our experience tells us the best way to provide coverage to these members is through family policies. Therefore, we will no longer offer individual policies to applicants under 19 except as part of a family policy.”
Although the news is disappointing, “the good news is that not all insurers are denying coverage,” said Laura Etherton, OSPIRG’s healthcare advocate. Thus far, only HealthNet has followed Regence’s lead. Kaiser Permanente, The ODS Companies, LifeWise Health Plan and PacificSource have pledged to continue offering coverage.
Under emergency rules, the Oregon Insurance Division established an initial enrollment period from Nov. 1 to Dec 31 of this year, and regular enrollment periods in February and August. Exceptions for birth, adoption or loss of coverage for various reasons must be allowed, and in some cases, if a child’s coverage with an insurance company ends, that company does not have to sell a new policy to the child for 12 months. Final rules, after a public hearing early next year, will come in March.
“Oregon needs to move forward on tangible things, to make healthcare affordable, to make certain we get the exchange and not get distracted,” Etherton said.
However, other insurance executives didn’t hesitate to criticize Regence’ decision when they appeared at a breakfast forum sponsored by the Oregon Coalition of Health Care Purchasers yesterday. Neither Mark Ganz nor Jared Short, Regence’s CEO and president respectively, attended. “They were definitely missed; a lot of people were disappointed Regence officials were out of town at an executive meeting. We knew that well in advance,” said Barbara Prowe, the coalition’s executive director who organized the event.
Robert Gootee, president and CEO of The ODS Companies, which also participates in the Oregon Health Plan, doesn’t intend to leave the individual market. “But we don’t want to be the last one in; we want our colleagues to be with us; it’s a tricky thing; we need to make it work financially; we’re watching it closely.” ODS has enrolled 2,000 children in its kids-only policy.
From LifeWise’s perspective, “it’s important that all major carriers share the risks and costs,” said Deana Strunk, communications manager. “For now, we are selling child-only policies and it's our desire to continue to do so.”
After hearing about Regence’s decision, Dave Rosenfeld, OSPIRG’s executive director sent e-mails to his 25,000 members, urging them to contact the insurer.   
“We can’t let Regence get away with this,” Rosenfeld wrote. “Please send a message to Regence CEO Mark B. Ganz and tell him to stop playing games with kids’ health.

“Child-only plans are designed for parents who could not afford healthcare for themselves, but desperately want their kids to be covered. Insurance companies like Regence would then only cover the healthy kids, and refuse coverage for sick kids which meant they could collect premiums while paying very little.

“The worst part is that for years, insurance companies like Regence have made huge sums covering just the healthy kids. Now that we've evened the playing field, they're done with kids only plans. It was only a good thing when it was easy money.

“The new law requires insurance companies to stop that practice, and cover all kids. But instead of doing the right thing, many insurance companies are refusing to offer child only policies to anyone. They claim that's because they can't afford to cover both sick and healthy kids, even though the impact on premiums would be less than 1 percent extra. 

“Let's be clear. This says a lot more about Regence than it says about the new healthcare law. After all, plenty of other insurance companies are gladly picking up the business Regence and others appear willing to turn their backs on. We applaud Providence, Kaiser Permanente, ODS and others here in Oregon for offering plans to children and refusing to deny coverage to sick kids.”
Although the federal reform law no longer allows insurers to deny coverage to children with pre-existing conditions, it does allow them to restrict enrollment during certain times of the year.
“We expect that insurers will enroll all children during these new open enrollment periods,” according to Cheryl Martinis, public information officer. “Insurers can, however, enroll children year-round. If they do this, they have to take all kids – sick or healthy. No underwriting.”
Limiting enrollment to a few months-a-year creates a disincentive for parents to wait for their child to become sick before buying coverage.

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“The worst part is that for years, insurance companies like Regence have made huge sums covering just the healthy kids. Now that we've evened the playing field, they're done with kids only plans. It was only a good thing when it was easy money." FYI - Regence loses money on its Individual segment already, and the cost has been going up because the pool of individuals covered is becoming more and more a population of people whose premium comes nowhere near paying for their medical expenses. If families were to purchase coverage for all of their children then this population might change, but in these economic times we have already seen that the healthy population goes without insurance and the sickest don't, because it's still cheaper for them to pay a monthly premium than it is to pay for their care out of pocket. Simple economics here - if Regence were to take on this population then how would they explain the additional cost to those members in the same pool? Or, should they just take these members on and become financially unstable so we can bail them out? It will be interesting to see how many insurers follow suit.