STUDY: States Encouraging Insurers To Sell Child-Only Policies

Since January 2011, Obamacare has prohibited insurers from denying coverage to children younger than 19 with pre-existing conditions. The measure is one of the health law’s most popular consumer protections and among its first to be implemented, and by 2014, this same protection will be expanded to all Americans with pre-existing conditions.

But in the meantime, Obamacare’s staggered implementation timeline has led to some unintended consequences. Concerned that guardians might take advantage of the law’s protections and only purchase dependent coverage when a young dependent gets sick — consequently raising insurance costs and overall market premiums — many insurers stopped offering child-only health policies on the individual market.

Fortunately, a new Commonwealth Fund study finds that 22 states and the District of Columbia have taken steps to encourage providers to keep offering child-only policies until Obamacare takes full effect. As Kaiser Health News reports, the states have used various regulatory carrots and sticks to encourage insurers to maintain such plans, ranging from mandates to pre-defined enrollment periods, in an effort to protect this small but vulnerable insurance market:

The child-only policies, which were available in most states before the 2010 law, are sold on the individual insurance market for children younger than 19 who don’t have a parent or guardian covered under the same policy. It’s not a big market – roughly 10 percent of the individual policies sold, according to the report — but to those people who need the coverage, it can be critical.

Children whose parents’ coverage doesn’t include dependents sometimes need such policies, say children’s health advocates, as do children who are being raised by older parents or grandparents who are insured through Medicare.

States have taken different approaches to encourage insurers to sell child-only policies. Some required insurers to offer child-only policies if they want to sell other individual policies in the state. Some established specific enrollment periods to sign up for child-only policies, to discourage parents from waiting until a child needs coverage to buy it. Still others established reinsurance mechanisms that compensate insurers if they incur high costs covering high-risk kids.

By the time that the rest of Obamacare’s provisions take effect, these kinds of insurance dilemmas will be a thing of the past, as all Americans will be required to have affordable coverage and no insurance companies will be able to discriminate against those with pre-existing conditions. With a vastly expanded pool of healthy Americans to mitigate any potential risk from the ill, insurers will no longer have incentives to pull out of certain markets.