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Positive trends in children's’ health insurance

by Tony Novak, CPA, MBA, MT
,last updated on 12/1/2011

We have become so accustomed to bad news about health insurance that the rare positive events sometimes go unnoticed. This may be the case with health care for children. This article discusses the recent trends in children’s health insurance that have contributed to an overall nationwide improvement in the health care of our children.

In the past, most children in the U.S. were covered under their parents' health insurance. When the parents had no health insurance, then the children had no health insurance. Starting in 1997, federally backed programs expanded Medicaid programs to target the uninsured children of lower income families. This program was so successful with low income families that it triggered the start of a national trend to insure children separately from their parents among working class families as well. We now realize that the health plan that provides the best coverage for adults is often not the same as the best plan for children. Families are increasingly taking advantage of the new child-only options available to split their coverage. Over the past few years, the number of applications for child-only commercial health insurance has increased steadily. The overall effects of these trends is that more children are gaining access to health care.

Government Programs

All 50 states and the District of Columbia now offer free or affordable child-only health insurance policies to lower income residents. A nationwide enrollment campaign titled "Insure Kids Now" was effective in getting the word out about this program. The U.S. has made significant progress in reducing the number of uninsured children. Even the children of illegal immigrants can be covered under these programs. The effort has been so successful, if fact that a 2005 article in the University of California Berkley News sited a study that suggested the benefits expanding the same coverage to parents of these children. The underlying study found that the medical care of the children would be improved if their parents had access to health care for themselves. The results are not surprising, but the study does not begin to address the costs associated with such a proposal. (Health Insurance for adults is an entirely different economic proposition not covered in this article).

Consumer-Driven Health Plans

Today' s health plans encourage employees to be more selective when choosing health insurance. In the past many people did not even know that it was possible to put children on a different health insurance plan than their parents. In many cases, the best value – in terms of a balance of coverage and price - is obtained when the children are enrolled in a different health plan than one or both of the parents. Child-only health insurance policies that are compatible with health savings accounts and the number of health savings accounts covering children is growing.

Court-Ordered Coverage

Family courts usually require one of the parents to provide health insurance in a child support order or divorce. The parent who provides health coverage may be able to extend coverage from an employer-provided health plan and some employers contribute to the cost of this coverage. In cases where this is not available, commercial health insurance is usually available at less than the cost of group insurance.

Relocation of Students

When children attend a school in a different geographical than the family home, coverage under the parent' s health plan is often limited. This is especially true for HMOs and managed care health plans that contract with medical providers in advance to provide care for members. Separate inexpensive health plans for students are widely available. College students are more likely to enroll in their own health insurance plan if they encounter difficulty obtaining treatment under a parents' health plan at medical facilities near their school.

Spill-Over Effects of Government Publicity Programs

Parents of children who are not insured but do not meet the requirements of their state' s Medicaid insurance program (due to income or residency) may be convinced of the importance of health insurance as a result of the massive national publicity-funded publicity campaign. While this was not the intent of the marketing of the “Insure Kids Now” program targeted toward low income families, there may be some spill-over effect on the behavior of middle income families. It appears that parents are now more likely to provide coverage for their children even when they do not have health coverage themselves.

Well-Child Care

A growing number of states require health insurance plans to include well-child. These state mandates typically cover immunizations, tests and related examinations. The following states now have laws that require all health insurance to provide specific well-child care benefits for children in addition to the usual treatment of accidents and illnesses: California, Colorado, Connecticut, District of Columbia, Florida, Georgia, Hawaii, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Mexico, New York, Oklahoma, Pennsylvania, Rhode Island, Texas, Utah, Virginia, West Virginia, and Wisconsin.

Commercial Health Insurance

Some health insurance companies offer policies for children only with favorable features, pricing and benefits. Celtic Insurance (www.celticenrollment.com) developed a niche in child-only coverage because the benefits specifically targeted for this purpose. The company points out that child-only individual insurance can be less expensive than adding children to the parents’ group health insurance plan through an employer and in some cases the benefits will be stronger. Online companies like Freedom Benefits specialize in individual policies for children that offer immediate online enrollment and downloadable proof of coverage. Commercial health insurance for children can be priced as low as $30 per month.

Editor's note: Following passage of the federal health reform law in 2010 all commercial "child only" policies to be withdrawn from the market. These are gradually being reintroduced under a combination of state laws and natural market forces and are expected to resume full availability by 2014.

While we continue to battle with the national health care crisis facing adults, it is good to note that significant strides have been made toward resolving these same problems for our children.

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