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Unintended Consequences?!


Today is September 22nd, and tomorrow, the very first provisions of the Patient Protection and Affordable Care Act (PPACA) become effective.


While there is plenty of time to debate the merits of which plan provisions are good for American consumers and which provisions insurance carriers prefer or dislike, make no mistake—the rhetoric has only just begun. 


Humor me, while I explain:  One such provision of PPACA is that no children under age 19 shall be denied any health insurance that they apply for.  Sounds like an easy fix that all can agree on, and overall, it sounds like a good thing.  On the contrary–in my home state of Tennessee, every major carrier that writes individual insurance has announced this week THEY WILL NO LONGER ACCEPT APPLICATIONS FOR CHILDREN ONLY.


Why? While the law demands guaranteed access, it fails miserably to give carriers and consumers access to the so-called “state exchanges” before the September 23rd deadline.  Without these safeguards in place, a carrier could literally be forced to accept an application on a child as he/she was in the ambulance on the way to the hospital.  Without the “rest of the law” taking effect simultaneously with the September 23rd guaranteed access provision (complete with required and established, state defined “open enrollment periods” and a sufficient penalty for those who chose not to buy coverage, the unintended consequence is that carriers are running for the hills.  If you are a shareholder of one of these insurance companies, you can’t blame them. 


Should someone be able to buy fire insurance on your house as the fire trucks are pulling up?  Of course not!  Without the full safety net provisions of the FULL law, you can see why the carriers are reacting the way they are.  That makes it nearly impossible for an otherwise, even healthy young child, to secure coverage on its own.   Now, a whole family will have to apply together, and proper risk assessment and underwriting will be reviewed for each family member.  Of course, if you get your coverage thru your employer, this lack of access doesn’t affect you, as  group plans carriers will still apply standard underwriting rules and have a larger pool to spread risk across.


There will be LOTS in the press about how horrible this is.  Just remember, there are two sides to every story, and as House Speaker Nancy Pelosi (D- CA), said so well:  “We need to pass this bill so we will find out what’s in it.”


My sincere hope is that regulators and carriers will find a way to correct this “unintended consequence.”  I suspect there will be many more to come.