There continues to be disagreement between HHS and the health insurance industry over the issue of child-only health insurance policies. Even though carriers are now accepting all children who apply as dependents on a parent’s policy (which includes most children in the individual health insurance market), the fact that many carriers have stopped offering child-only policies has been a point of contention between insurers and regulators for the last month.
Colorado recently implemented open enrollment periods for children, but so far, all of the major carriers here that stopped offering child-only policies are sticking with their decision to suspend sales of new child-only policies. It appears that the insurance industry would be ok with selling guaranteed issue child-only policies during open enrollment periods, if they could continue to sell medically underwritten child-only policies throughout the rest of the year. But HHS secretary Kathleen Sebelius has told insurance commissioners that selling child-only policies to healthy kids all year, but to sick kids only one or two months out of the year is “inconsistent with the language and intent of the Affordable Care Act.”
I do like the idea of open enrollment periods during which policies are guaranteed issue. It should help to cut down on the number of people who are trying to cheat the system by waiting until their kids are sick to purchase health insurance. But it also makes sense that insurance companies should be able to sell policies to healthy kids (whose parents presumably are not trying to cheat the system) throughout the year. I understand the idea that Sebelius is promoting – that coverage should be availably equally to everyone, regardless of health status. But that seems like a very idealistic view, and we do not live in an idealistic world. With no mandate requiring all children to have coverage, there would absolutely be parents who opted to go without health insurance for their children until if and when the children needed expensive medical care. This sort of behavior makes health insurance unsustainable, and insurers have to protect against it.
Even with guaranteed issue open enrollment periods for child only policies, insurers would definitely be taking on an increased risk compared with what they had when all individual policies were medically underwritten. If insurers could be allowed to continue to accept healthy kids (who present less of a financial risk to the carriers) throughout the year, this would help to offset the losses that they would incur by insuring the unhealthy kids who enroll during the open enrollment period. Regardless of whether that’s in line with the “language and intent” of the PPACA, it makes sense in the real world.