Why?
Because the new law mandates that companies that underwrite children must issue policies to cover underlying conditions. In effect, this means that the parents can chose not to insure their children until they need coverage (this will save money on monthly premiums) and then, once a need arises, the child can be insured while on the way to a doctor; the company will need to cover the child. Insurers are realizing that continuing with business as usual will reduce their cash inflows (premiums on these policies) and increase their cash outflows (as more parents buy policies when children are in need, and then immediately file claims). In order to protect their other customers from undue rate increases (increases which would solicit a further frown from the regulators) these insurers are choosing to stop underwriting individual children altogether.
The only thing to add, is that this consequence may be unintended, but it is hardly unexpected. Other consequences that are not unexpected are that (a) other private insurers will cut services and coverages, and (b) regulators and media will rise up to lay blame at the feet of these insurers very soon.
I believe there are going to be a lot more "unintended consequences" as this bill go forth - my company is unfortunately have to spend time and resources toward creating contingency plans on how we can manage financilly the burdon of this new policy. The health benifits plan we currently employee will have to be restructured or scraped inorder to become complient and the cost increase is projected to have a negitive outcome on our all-ready low bottom line numbers. Not sure the people who dreamed this one up really thought much about the unintended consequences, but rather were just focused on checking off one of the campaign promise boxes? M. Denzin - DBU
ReplyDeleteNews stories are emerging from Massachusetts, a state which introduced a bill similar to the national bill a few years ago, about a way that some employers there are choosing to cope with the new law. Some of the smaller employers there are dropping health-coverage for their employees altogether, because they know that their employees will qualify for the state provided health insurance. It is becoming more clear that employers around the nation will choose similar options in the future, as the federal law slowly comes into effect. This will have the consequence of (1) increasing the strain on state and federal budget (since state health outlays will exceed the amount collected in taxes for this purpose), and (2) increasing the predominance of the federal health-insurance at the expense of private health insurance providers.
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