New insurance rule throws the baby out with the bathwater

As the Affordable Care Act is implemented across the nation, states have taken varying approaches to making sure coverage is available for all children.  While most states have done a good job maintaining and ensuring the availability of health insurance for kids, Oklahoma has taken an enormous step backwards by changing state law to restrict coverage for newborns and babies.  This post explains the series of events leading up to a recent move by the Insurance Commissioner to pass an unprecedented and short-sighted emergency rule that makes it impossible for some babies to get health insurance in the state.

Beginning in September 2010, the Affordable Care Act prohibited new health plans from denying coverage to children based on pre-existing conditions.  In some instances, insurers withdrew from the child-only market rather than comply with the guaranteed issue rule.  It’s very important to note that this did not include policies that are sold to adults with children as dependents – just child-only policies sold on the individual market.  Such policies are often sold to parents whose employers don’t have coverage or to grandparents on Medicare who are the primary caregivers to their grandchildren.  In thirty-three states, caregivers are still able to access child-only plans.  In fact, some states had guaranteed-issue for children even before the federal health care law.

However, seventeen states initially reported that no carriers were selling child-only plans to new enrollees after the guaranteed-issue rule went into effect.  Many of those states have since taken action to ensure that all their children are able to get coverage.  Colorado passed a law that mandated participating insurers cover children.  The legislation included sensible provisions to protect insurer profits – like a hefty surcharge for caregivers who drop coverage then re-enroll when their children got sick.  Kentucky’s Insurance Commissioner passed a rule that insurers participating in the state’s individual market had to cover children.  California passed a law barring insurers from participating in their market for five years if they withdrew from the child-only market.

Insurance Commissioner Doak

How did Oklahoma respond?  Our Insurance Department made a downright Faustian bargain with insurers:  In exchange for re-entering the child-only individual health insurance market, state regulators agreed to exclude babies up to 1 year old from coverage altogether.  The state permitted babies to be uninsurable in the child-only market in Oklahoma by law.  According to the Insurance Department, this is what insurance companies said they needed to reenter that market.

Why this age group is more risky (or less profitable) for insurers is a bit of a mystery.  A child can just as easily come down with an expensive life-threatening illness at 13 months as at 11 months.  Proponents of the rule have informally hinted at one insurer’s consternation over a supposed ‘million-dollar-baby’ in Oklahoma.  However, insurers are supposed to take on risk, it’s the very essence of their business model and business is booming.  Insurers in Oklahoma made about $25 million in after-tax profit last year in the individual market alone – which doesn’t even include profits from the large group market, where most Oklahomans get their health insurance.  Why the Insurance Department chose to accept such a radical demand from the industry is the real mystery.

Perversely, it’s the healthiest babies that are most affected.  There are two high-risk pools for individuals with pre-existing conditions currently operating in the state.  However, only those who are uninsurable because of serious health conditions are eligible for the state-funded pool and only those who have been uninsured for at least 6 months are eligible for the federally-funded pool.  Under Oklahoma’s new rule, insurers don’t have to offer coverage to healthy babies through a child-only plan anywhere in the state, period.  Caregivers with healthy newborn babies who aren’t eligible through an employer or make too much money to cover their baby through Medicaid, i.e. a successful entrepreneur or a grandparent on Medicare, are out of luck.

The Insurance Department, with the stamp of approval from Governor Fallin, has thrown the baby out with the bathwater.  It appears they’ve unilaterally ceded to insurers’ demands instead of taking action to protect and defend Oklahoma children, all the while blaming the new federal health care law.  Such a strategy may provide political cover, but it’s bad policy.  They could easily have made rule changes at the state-level to keep the child-only market viable without offering up newborn babies as a bargaining chip.  They simply chose not to.


25 thoughts on “New insurance rule throws the baby out with the bathwater

  1. I guess the $25 million profit wasn’t enough. And our insurance commissioner and governor bought it. However, they SOLD OUT the babies of Oklahoma in the process. Shame on you both! How can this happen….two people can make a decision like this that affects thousands of children in our state?

  2. How sad and how heatless can they be? I marvel at the stupidity of our governor and insurance commissioner. Once again – the rich get richer and the poor are left out in the cold. When will the people of Oklahoa wake up?

  3. I have the greatest respect for your organization’s research of current issues and thank you for providing more information on this issue. I am still a little confused about who will be affected though. Your report seems to say to me that the change will not affect policies sold to covered adults with children. When I read the press release, it seems like it said that the rule change said that it eliminated birth as a qualifying event for individual coverage made me think it was applicable to group policies who usually use the term qualifying event for events that allow members to change their coverage. If it only applies to child only policies why wouldn’t they just say child only policies do not have to provide coverage to children under one year? I cringe when I think about the preemie babies needing months of hospitalization and the parents who will be bankrupted by it.

  4. @Jo That’s correct, the change will not affect policies sold to covered adults with children. In other words, it doesn’t affect group or family plans, just child-only coverage sold on the individual market.

    You ask: “why wouldn’t they just say child only policies do not have to provide coverage to children under one year?” In effect, that’s almost exactly what they have done.

    Thanks for the feedback! We’re worried for the caregivers of those preemies too.

  5. Make no mistake about this–Doak knows exactly who he wants to fund his campaign in 2014. This is just another political move by an Okie Conservative who just lobbies to the entities that will line his pockets come election time. Mind you, this is a man who ran on a “passionately pro-life” platform… That’s him making sure it’s his business as to what is going inside my uterus–however–up to a year after a baby is born–is unimportant to him.
    Gimme a break, Doak. Doak trekked around the state earlier this year and hauled ass when it came to declaring an emergency so adjusters could cut checks to cover the losses of rich boat and party barge owners in the Grand Lake area earlier this year but he doesn’t give a damn about the 600,000 Oklahomans without health insurance and he obviously doesn’t give a damn about their children either.

  6. Those healthy babies with no access to insurance coverage might be the luckiest of all; they’ve got a much better chance than their insured peers at escaping the onslaught of harmful vaccinations to which they’d otherwise be subjected. This will allow their bodies to develop a more robust, healthy immune system which will benefit them in innumerable ways for the rest of their lives.

  7. These situations happen in my former home state because Oklahomans listen to the Bible Belt rhetoric of those who want power so they can line their own pockets. They use their constituents for their own enrichment. This has been going on for decades in Oklahoma and I don’t see it changing anytime soon. Many are more interested in regulating a woman’s uterus than they are in dealing with issues that affect children once they’re born. I know of one well-known state representative whose teenage son called my friend’s teenage daughter a “baby-killer” because her parents are Democrats. That’s the mentality of too many people in Oklahoma these days.

  8. For all those people who voted straight-ticket Republican, this will be the first of many times I can say, “I TOLD YOU SO!” Of course, as long as Republicans spew religious speech at the idiotic masses, Okies will continue to vote for them.

  9. This exemplifies the true attitude of most “pro-life” people – they are merely pro-birth. They don’t care what happens to these poor, defenseless infants once they are born. Betcha he’s pro-death penalty, too. Also, who will pay for the outbreaks of pertussis, measles, mumps, etc. for these infants that have not received vaccinations? Special education for infants not identified with problems? What is wrong with Doak? What a mecenary.

  10. I normally vote Republican, but I did not feel Mr. Doak had enough experience in this field. I voted for the incumbant. She was well informed on the mass of confusing changes our health system was about to make, very articulate and energetic. I am a grandmother of four; deeply disappointed to find out the health of these newborns is at risk. A Saint Louis, MO transplant four decades ago…I am PROUD to be an Okie, but I am NOT proud of THIS!

  11. A question…..will the child unable to obtain private insurance now be covered by Soonercare?

    If not, this becomes an attack on the middle class of Oklahoma. This needs to be stopped. NOW!!

  12. Once again Politicians,being politicians.Watching there own backs.Making sure they get that money in there pockets they need to get re-elected.This has nothing to do with Republican or Democratic Policy.Politicians are to blame,money and more money that’s what it is all about.The Insurance Company’s are the ones pushing this kinda B.S. and they just give the money to the Politician who agrees with them. My Point Of View. Probably incorrect to most who bother to read this,but the Political Parties in this Country are so DAMN busy pointing fingers at the other side.I don’t believe anyone of them even knows whats going on.Sad to hear unfortunately that’s POLITICS for you.

  13. @Marina: families have to qualify to be on soonercare. since the qualifications are usually determined by the income of the parents, not the child, then the child should still be elligable, however, if you are like me and can’t afford to pay to add a dependant but make too much for soonercare, then your child will go without insurance.

    @Becca: Vaccinations are not harmful, nor does the lack of vaccines promote better a superior immune system. Granted that some vaccines have had side effects, the majority of vaccines given prove more beneficial than if a child were to go without. many vaccines prevent disease by allowing the body to build up immunity to a “copy” of the disease such as polio. In a situation where a child contracts polio, the chances of actually fighting it off is severly deminished in children with no prior exposure to vaccines.

    in short, All vaccines do is build up immunity, where as children without vaccines have no reason to build up such immunity.

    I’m very upset about this “law” as my son will be born next april.

  14. I find it interesting that a state that consistently votes republican (those people who care nothing about the common folk) then complains when Republicans institute policies that are very Republican! What can you expect from a party that values corporations more than children? If citizens want the government to help our own people, then voting republican is counter to that goal. I am not at all surprised by this law…it is a typical part of midwest hypocrisy.

  15. @Marina You must be income-eligible for your child to qualify for SoonerCare coverage. In Oklahoma, qualifying households may earn no more than 185% of the federal poverty level – that’s $34,280 for a family of 3.

  16. Republicans only care about babies until they’re born. At birth they should start pulling themselves up by their bootstraps, I guess.

  17. In addition to providing coverage for 20 million people, health care reform has changed the way we look at health care delivery and placed a priority on prevention. For me, one of the biggest successes of the ACA is its commitment to training primary care physicians, who are in increasingly short supply as many medical students choose more lucrative specialties. read more

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