The departure of six major health insurance carriers from the individual child-only market in Colorado might not be permanent, as it appears that both the Colorado Division of Insurance and HHS are working with insurers to try to make child-only policies available to the public and financially feasible for insurance carriers.
The major concern for insurance carriers is that without a mandate requiring all children to maintain coverage, and with coverage being guaranteed issue for children regardless of medical history, parents could wait until a child is ill to sign up for health insurance, and then drop the coverage once treatment had been completed. Obviously not all parents would do this, but even if some of them did, it would become very difficult for insurers to manage their risk.
Although all children’s coverage is now guaranteed issue, it’s understandable that child-only policies posed more of a risk to insurers than family policies. Families are less likely to stop and start their coverage, specifically because the adults on the plan are not guaranteed issue until 2014, so it’s not currently possible for adults to try to game the system and wait until they are ill to apply for coverage. This barrier against adverse selection no longer exists in the child-only market, which is why so many carriers have opted to no longer offer those policies.
Child-only coverage is very rare; most children are covered as dependents on a parent’s policy. And even in a case where a child-only policy is needed, there are usually other options available. But it would be beneficial to consumers and to the insurance industry’s public image if child-only coverage could be restored as time goes by.
The Colorado Division of Insurance officially implemented open enrollment periods for children last week, with the first one going on now through the end of October, and subsequent open enrollment periods in January and July each year. This would apply to any child-only policies, for carriers that offer such coverage, and would help to minimize the risk that parents might choose to wait until a child is sick to obtain coverage. So far, none of the carriers who had backed out of the child-only market have commented on whether the open enrollment periods might make them change their minds, but AHIP (America’s Health Insurance Plans) has said that they are continuing to work with regulators to try to find solutions that would make the child-only market feasible for insurers in the future.
