Insurance companies are not allowed to enroll only healthy children in individual policies outside an enrollment period in which all children would be eligible, the U.S. Secretary of Health and Human Services said in a letter Wednesday.
Insurance carriers around the country, including all major carriers in South Carolina, stopped selling new individual policies for children 19 years old and younger — so-called “child-only” policies — when the first elements of national health care reform took effect last month.
Beginning Sept. 23, insurers could not deny coverage to children with pre-existing conditions. Instead, they eliminated access to child-only policies for everyone.

Insurers said the sudden influx of sick children, and of those whose parents enroll them after learning of a major illness or accident, would drive up premiums for all policy holders. Children may still be enrolled in coverage in family and group plans, and existing child-only plans are unaffected.
In a Wednesday letter to the National Association of Insurance Commissioners, Secretary Kathleen Sebelius called the move “extremely disappointing,” saying it is “inconsistent with the language and intent of the Affordable Care Act.”
Sebelius responded to a question insurers have raised in recent weeks: whether they would be able to deny coverage to some children outside a set open enrollment period.
“We have carefully considered these insurers’ legal and policy arguments, and have concluded that the approach they advocate is legally infirm,” she wrote.
The president of the National Association of Insurance Commissioners, a group that includes the S.C. Department of Insurance, said in response it would “continue to review” its role in the debate. Ann Roberson, a spokeswoman for the S.C. Department of Insurance, echoed that remark.
“Given that we have just received this information, the department will be reviewing its details in the days to come … [and will] encourage South Carolina’s carriers to offer coverage options to children and families,” she said in a statement.
A spokesman from America’s Health Insurance Plans, a national association representing insurance carriers, said carriers are being forced to make “difficult decisions” about child-only coverage, which he called a “small but critically important niche market.”
Robert Zirkelbach wrote in an e-mail: “The regulation has created a powerful incentive for parents to defer purchasing coverage until after their children need it, which could significantly raise costs and cause disruptions for families whose children are currently covered by child-only policies.”
In her letter, Sebelius outlined several ways insurers could keep costs in check. Carriers are allowed to charge a fee for people who drop coverage and later reapply, for example. Or they may adjust rates depending on health status, the letter said.