Child-Only Coverage & PPACA

Some insurers ceased to offer coverage to children in need of individual health insurance (child-only policies) in the wake of provisions of the Patient Protection and Affordable Care Act (PPACA) (111-148) that prohibit insurers from denying or limiting coverage for children under the age of 19 because of a pre-existing condition; however, many states responded to this “market disruption” by passing new legislation or issuing new regulations, according to a Commonwealth Fund study conducted by Katie Keith, JD, MPH, Kevin W. Lucia, JD, MHP, and Sabrina Corlette, JD. The majority of those states were successful at encouraging insurers to offer child-only policies. Based on their findings, the authors concluded, that “states have the flexibility to take innovative actions to maintain or improve their markets” and “insurers are highly sensitive to the risk of adverse selection.” The authors identified the critical need for regulatory incentives such as individual mandate, federal tax subsidies for coverage, and premium stabilization programs such as reinsurance and risk adjustment to avoid adverse selection and market disruption. 

 The study reviewed and analyzed state efforts to adopt requirements that are more stringent than federal law and found that nearly half of all states took action to promote the availability of child-only policies. The analysis focused on the availability of child-only policies in the individual market (it did not include the group market) and examined and reviewed only states that took new legislative and regulatory actions between January 1, 2010, and January 1, 2012. Twenty-two states and the District of Columbia took action; nine states passed new legislation, another 10 and the District of Columbia adopted new regulations, and three states issued new subregulatory guidance. Of these 22 states, nine states required insurers to offer child-only policies, 13 states and the District of Columbia took action to promote the availability of child-only policies but did not require insurers to do so, and two states established a reinsurance mechanism for child-only coverage. States’ approaches varied but included requiring insurers to offer child-only policies, establishing open enrollment periods, and developing reinsurance mechanisms.

 In addition to passing new legislation or regulations, some states relied on existing programs as a source of coverage for children with preexisting conditions and other states amended or reinterpreted their high-risk pool eligibility rules to allow children under the age of 19 to enroll in coverage. Several states required insurers to provide coverage to individuals on a guaranteed basis prior to PPACA and, therefore, already prohibited the denial of coverage to children under the age of 19. Although the study was confined to state actions between January 1, 2010, and January 2, 2012, the authors reported that states continued to address the availability of child-only coverage during the 2012 legislative session.