Some of the nation’s largest insurers are in open rebellion against a provision contained in the new healthcare reform law that is already in effect.  The shot across the White House’s bow is a decision by several insurers to stop selling child-only policies instead of complying with the law that blocks them from turning away kids with pre-existing conditions.  Anthem Blue Cross, Aetna, Inc., and others are refusing to sell the policies in states such as California, Illinois, Florida and Connecticut – even though the law requires that insurers cover children under 19 even if they have a history of illness.  Approximately 500,000 children nationally are impacted by this action.

The insurers claim that the new requirement will result in unforeseen costs related to covering eligible children.  The scenario they envision is that parents might buy policies for their children only after they get sick, creating a surplus of kids who suddenly need insurance coverage.  The decision by some of the big insurers to abandon this niche marketplace means that just a few firms will be forced to share what could be an enormous financial burden.  The good news is that relatively few child-only policies are sold.

The Obama administration immediately denounced the action.  White House Press Secretary Robert Gibbs told reporters “It’s obviously very unfortunate that insurance companies continue to make decisions on the backs of children and families that need their help.”

The stakes are especially high in California.  Legislation awaiting Governor Arnold Schwarzenegger’s approval would ban companies that refuse to sell child-only policies from selling insurance in the profitable individual market for five years.  Assemblyman Mike Feuer (D-Los Angeles), who wrote the bill, said “At a time when we are launching a national approach to ensure that all children have access to healthcare, Anthem’s actions represent a step backwards.  By threatening to drop child-only policies in California, the company jeopardizes the health of families and children.  I call on Anthem to reconsider its plan.”