A recent article from InsureBlog describes Cigna’s decision to stop paying agent commissions on any policy where a child is enrolled on a guaranteed issue basis, starting next month.
I agree with Bob that this decision is likely to result in fewer family applications placed with Cigna. But I wonder if the recent addition of the option for insurers to use an open enrollment period for children will make this sort of commission-cutting unnecessary for other carriers. Obviously insurers aren’t going to be excited about the prospect of offering guaranteed issue coverage to sick kids, especially while there is no requirement that all kids be insured (which would mean that there would be more healthy kids in the pool to offset the costs of care for the sick ones). But it does seem a bit counter-productive to discourage agents from marketing policies to families in general, as a family with a sick child might have several other healthy family members who would be on the policy too, requiring little in the way of expensive care.
My guess is that if the provision for an open enrollment period had not been added, the guaranteed issue for children idea would have caused more problems than it solved. There is no doubt in my mind that some parents would have opted to not have health insurance for their kids until if and when the child became ill and needed care.
Hopefully the fact that insurers can designate an open enrollment period for children to be accepted on a guaranteed issue basis will make it more likely that parents will keep their children continuously insured. The spirit of the law regarding coverage for children is good: It isn’t right that sick kids should be unable to get health insurance at any price. But with no requirement that all kids be insured, and without a designated open enrollment period, the new law would absolutely have encouraged adverse selection.
I found Bob’s article from a link in this week’s Cavalcade of Risk, hosted by Nancy Germond.