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Researchers: Child-only cover laws get mixed results

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Most states that have taken active steps to keep child-only health insurance available have succeeded, but three have not.

Katie Keith, a health policy specialist at Georgetown University, and colleagues have reported that finding in paper on the regulation of the child-only health insurance market that was distributed by the Commonwealth Fund.  

A child-only health insurance policy is a policy that covers one or more child without covering the parents or guardians. Uninsured parents who cannot afford family coverage may buy the policies to ensure that children are covered. In other cases, parents who can get only employee-only coverage through their employers might buy child-only policies to cover dependents.

Traditionally, the idea of child-only health insurance has had bipartisan appeal. In 1996, for example, Democrats in Congress asked health insurers to provide child-only plans.

 The drafters of the Patient Protection and Affordable Care Act of 2010 (PPACA) tried to improve children’s access to health coverage by including a provision that prohibits insurers from denying or limiting coverage for children under the age of 19.

PPACA did not set limits on the rates health insurers could charge sick children, but insurers argued that requiring them to provide coverage for sick children would create a “free rider” problem, by encouraging parents to wait until children were already seriously ill to pay for coverage.

Many health insurers moved to eliminate or restrict sales of child-only products.

Since then, Keith and colleagues say in their paper, 22 states and the District of Columbia have taken steps to try to protect the child-only health insurance market against PPACA-related disruption.

Nine states tried to handle child-only market disruption by passing laws. Ten states and the District of Columbia adopted regulations, and three states issued bulletins, memoranda or letters, the analysts said.

Today, the analysts say, child-only coverage is still available in 19 of those jurisdictions – Arkansas, California, Colorado, Delaware, Illinois, Iowa, Kentucky, Maryland, Missouri, Montana, New Hampshire, North Carolina, Oklahoma, Oregon, South Dakota, Texas, Utah, Virginia, Washington and the District of Columbia.

The analysts found that child-only coverage appears to be unavailable, or available only on a small scale, Indiana, Nevada and Ohio.

Nine states –  Arkansas, California, Colorado, Iowa, Kentucky, New Hampshire, South Dakota, Utah, and Washington – now require insurers that sell other types of coverage in the state to sell child-only coverage.

Child-only coverage is still available in all of those states.

Two states – New Hampshire and Oregon – have tried to encourage the sale of child-only policies, and those states both provide child-only coverage reinsurance programs.

Both of those states still have active child-only health insurance markets, the analysts said.

Nineteen of the jurisdictions have tried to reduce the free-rider problem by creating “open enrollment” periods.

Open-enrollment periods discourage families from waiting until children are sick to buy coverage by limiting the times when the families can buy family-only coverage.

The analysts found that 12 jurisdictions – Delaware, Illinois, Indiana, Maryland, Mississippi, Nevada, North Carolina, Ohio, Oklahoma, Texas and Virginia – tried to deal with PPACA-related child-only market disruption simply by creating open-enrollment periods, without imposing rules requiring any insurers to offer child-only coverage.

The three states with no active child-only coverage market are all in the group of states that have open-enrollment requirements but no requirements that insurers offer child-only coverage.

Of the nine states that required insurers to offer child-only coverage, five had sufficient legal authority to do so without passing new legislation. These findings suggest that states may be able to use existing legal authority to

One of the lessons of the analysis is that states do seem to have the flexibility to improve their markets, the analysts said.

“The findings also suggest the need for meaningful regulatory incentives to avoid market disruption in successfully implementing broader [PPACA] reforms in 2014,” the analysts said.

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