The issue of children with pre-existing conditions having access to individual health insurance on a guaranteed issue basis has been in the news repeatedly since the Patient Protection and Affordable Care Act was signed into law in March. The Obama Administration had been clear in saying that health insurance companies would have to accept all children under age 19, without regard for pre-existing conditions. But last week that position was clarified with a bit of added leeway for insurers, allowing them to set open enrollment periods during which children can have access to health insurance regardless of pre-existing conditions.
The addition of the option for insurers to have an annual open enrollment period for children makes the new rules regarding children much less likely to result in adverse selection. There is currently no requirement that all children have health insurance (that won’t come until 2014), and if the law had been interpreted to mean that health insurance carriers simply had to accept any child who applied, at any time, with no regard for medical history, there would have been nothing to protect insurers (and insureds who maintain continuous coverage) from people who opt to go without health insurance until they are sick.
Some parents with sick kids have done everything they could to maintain coverage for their children, and the new law will be a blessing to them. But we’d have to be wearing very rose-colored glasses to assume that no parents would abuse the system by not paying premiums when their kids are healthy, and then applying for coverage when something appears to be wrong. Having an annual open enrollment period makes health insurance available for families who truly want to maintain continuous coverage for their children but have been unable to do so because of pre-existing conditions. But it will make it much more difficult for people who want to obtain coverage for a limited time while a child is in need of care.
So far, we’ve been notified by one Colorado carrier (Celtic) that they will no longer accept applications for child-only policies, and other carriers around the country are taking similar steps. Hopefully the fact that insurers are going to be allowed to set up open enrollment periods will mean that most carriers will continue to offer child-only policies. There has always been a genuine need for that type of policy, and I’d hate to see if disappear because of adverse selection.
