The effects of Obamacare are getting weirder with each passing month. Now, new requirements created by the law are causing some insurers to consider no longer offering “child-only” policies to avoid having to raise rates.

Most children are covered by parents’ employer-provided insurance or by government programs. But some parents buy individual health insurance coverage just for their kids. Starting next year, Obamacare prohibits insurers and employer plans imposing any pre-existing condition exclusions on children and requires them to accept all applications for children who qualify for coverage under their plans (so-called “guaranteed issue”). Those provisions could have serious and unintended consequences for children, as well as others.

Insurers fear that, by allowing parents to buy cover coverage for their children whenever they choose, families may wait until a child faces a serious illness to buy a policy. The result: Insurers will need to raise rates for these kid-only policies, and if other regulations limit how much they can raise rates for covering children, then they could be forced to raise rates for adults in the individual market as well.

The Associated Press reports that Blue Cross and Blue Shield of Florida Vice President Randy Kammer “said the company’s experts calculated that guaranteeing coverage for children could raise premiums for other individual policy holders by as much as 20 percent.” According to Kammer, “We believe that the majority of people who would buy this policy were going to use it immediately, probably for high cost claims. …Guaranteed issue means you could technically buy it on the way to the hospital.”

Insurers claim that if the regulations regarding coverage of pre-existing conditions and guaranteed issue for children—which will take effect on September 23—are limited so as to apply only to an open-enrollment period once a year, much of the expected problems might be mitigated. The Department of Health and Human Services, however, hasn’t indicated yet if they will go this route or not.

Insurance commissioners from Florida, Oklahoma, and Kansas all claim that insurers are already refusing to write new individual policies for children in their states. In Florida, Blue Cross and Blue Shield, Aetna, and Golden Rule all plan to stop writing new individual policies for kids. And, as Kansas Insurance Commissioner Sandy Praeger attests, “When it’s happening with national companies, I can guarantee you it’s happening probably in every state.”

Oklahoma Insurance Commissioner Kim Holland points out that “the more we reduce opportunities in the market … the more challenging it is for [families] to secure the coverage that they want and [are] able to afford.” Obamacare’s countless new rules and regulations will certainly limit choices for families—that is becoming clearer by the day.

College seniors are eagerly ordering caps and gowns for May graduation ceremonies. But graduation day often brings loss as well as gain. Many graduates will lose coverage under their parents’ health plans as soon as they get their diplomas.

It wasn’t supposed to be that way. Obamacare promised to let “children” remain on their parents’ health plan until the age of 26. It was one of the few provisions in the law to attract bipartisan support. Yet the hastily drafted legislation managed to botch even this seemingly simple reform.

Young adults constitute “one of the biggest groups of the uninsured,” according to the Fiscal Times. The paper cites a Commonwealth Fund survey of 2,002 young adults that found that nearly half (45 percent) of those aged 19 – 29 lacked coverage for at least part of 2009.

The coverage gap often starts when young people graduate college. The survey found more than three of every four college students carried coverage while in school, but 28 percent lost it upon graduation. Close to half of those who wind up with coverage after graduation experience a temporary gap in coverage.

It promises to be no better this May. The extended “child coverage” provision of Obamacare doesn’t kick in until months after this year’s spring graduation ceremonies. So, yes, there is a coverage gap. No problem, unless you get sick or have an accident. Those with pre-existing conditions can find it all but impossible to purchase coverage on the individual market.

Bipartisan or not, it’s hardly a triumph of enlightened social policy to have adult “ children” on their parents’ insurance, or sleeping in the basement apartment when they should be out—yes, out of the house—and on their own. Rather than pursue systemic reform that would remove the difficulty of purchasing insurance on the individual market due to pre-existing conditions, the new law creates hastily crafted “fixes” that only exacerbate existing problems.

Major flaws in the gargantuan Obamacare bill started to emerge almost immediately after it was signed into law. One of the most embarrassing: failure to ensure immediate coverage for kids with pre-existing conditions—something Obamacare supporters had constantly promised was part of the bill.

Looking to provide cover for those who wrote the bill, Secretary of Health and Human Services Kathleen Sebelius fired off a warning letter to insurers. “Health insurance is designed to prevent any child from being denied coverage because he or she has a pre-existing condition,” she scolded. As though it was their mistake!

The pols got in the act too. According to the Associated Press, “House leaders later issued a statement saying their intent in writing the legislation was to provide full protection.” Well all right, then!

Luckily, in this case, the insurance industry is declining to take advantage of politicians’ sloppiness. The AP reports that Karen Ignagni, president of America’s Health Insurance Plans, wrote back to Sebelius, saying the industry will “fully comply” with the HHS regulations on this matter, once they are written.

But is this anyway to run a country? To have lawmakers and regulators coerce the private sector into doing what they simply declare to be their “intent,” rather than what is actually written in the law? Legislation is supposed to be scrubbed of shortcomings such as this before it’s brought to the floor for a vote.

Expect more episodes like this in the months to come. Washington loves flexing new-found muscle—in this case, the heavy hand of lawmakers and regulators browbeating others for failure to do what they want ‘em to do, but failed to put into law.

Episodes like this reveal the merits of taking a considered, incremental approach to health care reform. To learn more about the right way to successful health care reform, click here.

While President Obama and congressional liberals have yet to come down from the high of passing their historically horrible health care legislation, conservatives are still hard at work promoting health care reform. This is because with its numerous new taxes, mandates, penalties, regulations, and new role for government, Obamacare can hardly be called reform. Instead, the recently passed law is more likely to aggravate existing problems and create new ones for our health care system, not to mention add staggering new amounts to the federal deficit.

One crusader still hard at work is Rep. Paul Ryan (R-WI). In an article published last week in the New York Times, Rep. Ryan writes, “To be clear: it is not sufficient for those of us in the opposition to await a reversal of political fortune months or years from now before we advance action on health care reform. Costs will continue their ascent as the debt burden squeezes life out of our economy. We are unapologetic advocates for the repeal of this costly misstep. But Republicans must also make the case for a reform agenda to take its place, and get to work on that effort now.”

Rep. Ryan outlines the following as changes opponents of Obamacare can start making headway on now:

– Reforming the Regressive Tax Treatment of Insurance. Says Rep. Ryan, “This discriminatory tax treatment lavishes the greatest benefit on the most expensive plans while providing no support for the unemployed, the self-employed or those who don’t get coverage from their employer.” Removing this biased tax treatment and replacing it with a more equitable system of universal tax credits would create more affordable and portable care for all Americans.

– Coverage for Pre-Existing Conditions. New law ensures coverage for those with pre-existing condition by requiring guaranteed access. However, in order prevent those who need insurance from waiting until they are sick to purchase it, this provision is accompanied by an unprecedented and unconstitutional individual mandate to purchase insurance. Instead, Rep. Ryan suggests “focus[ing] on state-based solutions, including robust high-risk pools, reinsurance markets and risk-adjustment mechanisms.”

– Strengthening Patient Choice. One of the biggest faults with our current health care system is that patients are shielded from the financial choices surrounding their care. Obamacare will only make this worse. Instead, Rep. Ryan argues that “We should ensure that health care decisions are made by patients and their doctors, not by bureaucrats, whether at an insurance company or a government agency. By inviting market forces into health care, we can encourage a system where doctors, insurers and hospitals compete against one another for the business of informed consumers.”

– Real Entitlement Reform. If middle-aged and younger Americans wish to receive the benefits of Medicare and Social Security in old age, something must be done to restore sustainability to these financially crippling programs. As Rep. Ryan points out, entitlement programs create a long-term obligation of $76 trillion—it is impossible that the United States could fulfill this obligation without going bankrupt. Entitlement programs alone will eclipse historical tax levels by 2052—this is to say nothing of other federal programs, such as defense and education. Proponents of Obamacare claim that billions in cuts to spending on Medicare will prolong its solvency, but this is false—all projected savings from Medicare will go to paying for new entitlements under the new law. Addressing this problem now will ensure that the safety net provided to senior citizens and low-income Americans will persist for generations to come.

Repealing the breathtakingly sloppy legislation passed by Congress last week should remain a priority for proponents of true health care reform. Rep. Ryan’s rallying cry reminds us that “[t]he opposition must always speak with vigor and candor on the need for wholesale repeal and for real reform to fix what’s broken in health care.” Heritage analyst Nina Owcharenko further explains here how Congress can achieve successful health care reform with bipartisan support.

A signature achievement of Obamacare, we were told, was that it would provide immediate protection for children with pre-existing conditions. In the brave new world of Obamacare, no ailing child could be denied coverage.

Turns out, that just ain’t so. According to the Associated Press, “Under the new law, insurance companies still would be able to refuse new coverage to children because of a pre-existing medical problem, said Karen Lightfoot, spokeswoman for the House Energy and Commerce Committee, one of the main congressional panels that wrote the bill Obama signed into law Tuesday. However, if a child is accepted for coverage, or is already covered, the insurer cannot exclude payment for treating a particular illness, as sometimes happens now.”

It’s a problem Congress could have fixed without resorting to a massive restructuring of our health care system.

How? Well, they could have made some simple changes to insurance rules to make sure policies will cover conditions discovered after the policy is issued. They also should have moved to provide a path for the uninsured to get coverage of pre-existing conditions on a conditional basis. And they certainly should have made it possible for individuals to buy coverage from outside their states. This would both allow consumers to shop on a national basis for health insurance that best suits their needs and expand the coverage options available to them.

In a recent video, Heritage analyst Ed Haislmaier lays out how best to reform the insurance market to meet the needs of Americans with pre-existing conditions. To learn more about patient-centered, bipartisan approaches to health care reform, click here.

Ed Haislmaier, Senior Research Fellow at The Heritage Foundation’s Center for Health Policy Studies, takes on the 2,700 pages of Obamacare — and the notion that all that legislation is needed to fix the problem of pre-existing conditions.

As Haislmaier explains, Congress could solve the pre-existing conditions problem quite simply and in only two pages. How? Watch this video to find out.

The President’s health care proposal contains little that is new. The well tested rhetoric used by the White House to sugarcoat the health policy outline should not fool ordinary Americans. This proposal is even more expensive than the Senate bill upon which it is apparently based: $950 billion over ten years rather than $871 billion.

Consider the claims made by the White House regarding the effects of the President’s proposal on the health care system.

The Rhetoric on Affordability.
“It makes insurance more affordable by providing the largest middle class tax cut for health care in history, reducing premium costs for tens of millions of families and small business owners who are priced out of coverage today.”

The Reality: In fact, the tax credit would be limited to only a limited number of persons within a limited set of income brackets, not the entire middle class. One cannot ignore the tax increases, or the prescribed cost of the health care benefits packages themselves. As the premiums increase, the cost of the subsidies, based on percentage of income, would track these increases, resulting in another direct cost shift onto all taxpayers. In fact, the President’s proposal, based on the Senate bill, would result in major tax increases (estimated at $629 billion over ten years) and would include a variety of middle class tax increases. This, of course, once again violates the president’s promise to refrain from imposing taxes on those with family incomes of less than $250,000 per year.

The Rhetoric on Personal Choice. According to the White House:
“It sets up a new competitive health insurance market giving tens of millions of Americans the exact same insurance choices that members of Congress will have.”
The Reality: The Health Exchanges in Congress’ health bills and the President’s proposals are not structured to serve as a real competitive marketplace for insurance, in the sense of anything that would resemble real free market competition; rather these institutions would primarily serve as the federally designed mechanism to impose strict federal regulation on private insurers. By contrast, in the FEHBP, the federal government does not standardize the health benefits of private health plans for its employees. For federal employees and retirees, there are a wide variety of health benefit offerings and combinations of benefit packages, ranging in price from expensive health plans (like the Blues Standard Option) to low cost plans (like the Mail handler’s Value Plan, a union plan), and a variety of health plan types, ranging from comprehensive plans to health savings accounts and high deductible plans, plus a wide range of premiums and co-payments.

The Rhetoric on Health Insurance Accountability. According to the White House draft outline:
“It brings greater accountability to health care by laying out commonsense rules of the road to keep premiums down and prevent insurance industry abuses and denial of care.”

The Reality: The reference to the proposal’s requirement of guaranteed issue, regardless of pre-existing conditions, raises a number of thorny issues. Whatever one’s views on the wisdom of eliminating pre-existing conditions for enrollment and providing for guaranteed issue, this provision will increase premiums dramatically. The problem is aggravated in the individual health insurance market; most of the problems that politicians cite with denials or discrimination do not apply to the vast majority of Americans in group health insurance. Already under the Senate bill, upon which the president’s latest proposal is based, CBO projects an increase up to 13 percent for the premium price of individual insurance through the state based health insurance exchanges. When health insurance enrollment in the individual market is eased in this fashion for older and sicker persons, those most in need of coverage, the result is an increase in the volume of medical claims and a sharp increase in the average insurance claims costs. This drives up premium costs, and the likely effect is that younger and healthier persons, those least in need of coverage, drop out of the insurance pool.

The President’s proposed remedy to counteract the bad effects (the inevitable higher premium costs) of this government intervention is to prescribe yet another government intervention: force the younger and healthier persons to buy the government’s higher cost health insurance through the imposition of an individual mandate.

In the original Senate bill, upon which the President’s proposal is based, the individual mandate would impose an annual penalty for not buying the government specified insurance, progressively increasing year by year until it reaches $750 in 2016. The Obama proposal would lower the flat payment from $750 to $695 in 2016, and would raise the percentage of income that would be assessed by 2016 to 2.5 percent of income. The president proposes that persons who do not file income taxes would be exempt from the penalty; that’s a lot of people. Like the Senate bill, there would be a “hardship” exemption.

None of these tweaks reverse the plain economic incentives. If a person perceives that payment of the mandate penalty (a cheaper option) is a better deal than buying the health insurance (a more expensive option), then the economic incentives run directly against the purchase of health insurance. The problem is aggravated if the regulatory regime imposed by Obama and Congress would enforce guaranteed issue and pre-existing exclusions, insurers would have to take “all comers”, meaning that as person could literally sign up for health insurance from a hospital bed and drop it later and pay the cheaper fine. This would guarantee higher premium costs, and invite 70’s style price controls (already embodied in the Obama proposal), which means, of course, fewer, not more, hospital beds. Thus, the proverbial liberal cat chases its leftwing tail. As Professor Martin Feldstein at Harvard has observed, the economic incentives built into this regulatory regime could result in even higher rates of un-insurance, more risk segmentation, and even higher premium costs. As Feldstein points out, the end result, we could end up passing a trillion dollar health bill and find ourselves with even more uninsured Americans.

The Rhetoric on Fiscal Responsibility. According to the White House outline:
“It puts our budget and economy on a more stable path by reducing the deficit by $100 billion over the next ten years – and about $1 trillion over the second decade – by cutting government overspending and reining in waste, fraud and abuse.”

The Reality: The White House promise of fiscal and economic responsibility is based on a prescription for a huge entitlement expansion (through Medicaid), major tax increases and massive spending, and the never-ending crusade against “waste, fraud and abuse.” This would be comical if the President and Congressional leaders were not so incessantly earnest. That rhetoric only continues to undermine public trust.

Consider the previous promises of deficit reduction through the health care bills. They were based on transparently dishonest accounting gimmicks- assumption of the continuation of physician Medicare payment rules and reductions ( or separating out the Medicare physician payment cost increases in other bills), different start dates for full tax and benefit implementation ( $2.5 trillion for the Senate bill according to Senator Max Baucus, the Montana Democrat) and double counting of Medicare “savings”, for example.

Concerning the President’s proposal, the Congressional Budget Office, the official budget scorekeeper for Congress, said,

“Preparing a cost estimate requires very detailed specifications of numerous provisions, and the materials that were released this morning do not provide sufficient detail on all of the provisions. Therefore, CBO cannot provide a cost estimate for the proposal without additional detail”.

The President’s proposal is similar to the House and Senate bills, but contains several new and much more costly provisions. It is thus safe to assume it would cause the same deficit increase, especially when elements such as the “doc fix” or the CLASS Act are properly accounted for.

Washington’s “political class” supports the Congressional and Presidential health initiatives. But ordinary Americans are tired of official Washington’s deceitful but flowery rhetoric, accompanied by the shameless sellout of taxpayers to special interest pressure groups (the union exemptions from high taxes on health benefits, the Nebraska and Louisiana Medicaid deals, among others).

Members of Congress attending the Summit must remember that the American people oppose Washington’s takeover of the health care sector of the economy. Elected officials should listen to those they govern and start afresh with health care reform.

Co-authored by Kathryn Nix.