• Skip to primary navigation
  • Skip to main content
  • Skip to footer
  • About Us
  • Contact
  • Qualifying Event
  • Subsidies
  • Open Enrollment

Colorado Health Insurance Insider

No-cost broker assistance.

Avoiding Adverse Selection

August 12, 2010 By Louise Norris

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.

Related Posts:

  • Open Enrollment Period For Children
    Open Enrollment Period For Children
  • A Compromise That Makes Sense For Child-Only Policies
    A Compromise That Makes Sense For Child-Only Policies
  • Regulators And Insurers Still Working On Child-Only Coverage Issue
    Regulators And Insurers Still Working On Child-Only…
  • Few Carriers Offering Child Only Policies During Open Enrollment
    Few Carriers Offering Child Only Policies During…
  • Guaranteed Issue Policies For Children Happened Too Quickly
    Guaranteed Issue Policies For Children Happened Too Quickly
  • Colorado House Approves Child-Only Health Insurance Bill
    Colorado House Approves Child-Only Health Insurance Bill

Filed Under: Health Insurance Reform, Individual/Family Health

About Louise Norris

Louise Norris has been writing about health insurance and healthcare reform since 2006. In addition to the Colorado Health Insurance Insider, she also writes for healthinsurance.org, medicareresources.org, Verywell, Spark by ADP, and Boost by ADP, and Gusto. Follow on twitter and facebook.

Footer

Copyright © 2025 · Insurance Shoppers, Inc. · Privacy Policy