HHS Secretary Kathleen Sebelius has written a letter to the National Association of Insurance Commissioners reiterating what states to prevent insurers from dropping child-only policies, but HHS officials also reiterated that if states fail to act, the agency may issue a nationwide regulations to address the issue. The letter comes after several insurers announced they would stop offering child-only plans in response to new regulations that required companies to guarantee coverage to all children.
“While we recognize industry concerns about adverse selection, we believe that there are options other than abandoning families who seek this coverage, as evidenced in States with similar laws already in place,” the letter states. “In response to questions we have received, we have clarified that a range of practices related to “child-only” policies are not prohibited by the Affordable Care Act, such as allowing:
- Issuers in the individual market to determine the number and length of open enrollment periods for children under 19 (as well as those for families and adults), consistent with state law;
- Rates to be adjusted for health status as permitted by state law (note: the Affordable Care Act prohibits health status rating for all new insurance plans starting in 2014);
- The imposition of a surcharge for dropping coverage and subsequently reapplying for it if permitted by state law;
- The implementation of rules, consistent with state law, to help prevent employers from encouraging workers to enroll children in child-only policies instead of employer-sponsored insurance; and
The letter notes that some states already “have in place existing laws to prevent discrimination against children and others with pre-existing conditions” and uniform open enrollment periods, while others allow middle-income parents to buy child-only policies through the CHIP program or enroll in existing high-risk insurance pools.
“We want to make clear that kids to have options and so what we’re doing here is setting out several of the options kids have both in the private market and in various state programs and the established high risk pools and the new Pre-existing Condition Insurance Plans [PCIP],” Jay Angoff, HHS’s Director of the Office of Consumer Information and Insurance Oversight said on a conference call with reporters. Angoff said that while some states will have to rely on the legislature to pass the new changes, others can implement the rules by bulletin.
Asked why HHS doesn’t establish a federal open enrollment period, Angoff replied, “we need to do it by regulation and the regulation would take some time.” “I mean, that’s something that we’re very seriously considering and talking to the industry about and if that would result in companies who stop writing child-only business, starting again to write child-only business, I think that’s something that makes a lot of sense.”
Insurers had first challenged the law’s pre-existing requirements in March, insisting that the provision would increase premiums and was not required by the law. Pressed by HHS Secretary Kathleen Sebelius, however, AHIP, the industry’s lobby, eventually relented. Karen Ignagni issued a letter promising to “fully comply with [the] regulations.”