Kentucky Insurance Commissioner Sharon P. Clark has ordered insurers selling in the commonwealth's individual health insurance market to offer an annual open enrollment period in January for residents under age 19.
The move comes after the Kentucky Department of Insurance in early October asked health insurance carriers to explain their decision to drop child-only plans as of Sept. 23, the date after which the Patient Protection and Affordable Care Act prohibited insurers from refusing to write policies for people with pre-existing conditions.
Insurers argued that conditions did not exist in Kentucky that provided a level playing field for insurers who would write these policies.
"The regulations for implementing children's coverage provisions of PPACA effectively created guarantee issue requirement with no limits on pre-existing conditions," said Jimmy Lee, senior vice president for WellPoint, at an October hearing. "And as we were one of the few, if not the only, private carriers issuing child-only policies leading up to Sept. 23, it led to an un-level competitive playing field."
With private carriers not taking new child-only applicants after Sept. 23, Clark said she was concerned the only place children could get coverage would be through the commonwealth's high-risk pool insurance program, Kentucky Access.
Kentucky Access Director Al Perkins said the effects of being the only potential source for child-only insurance would "be immediate and harsh." Citing current figures that showed Kentucky Access took in just over $650,000 in premiums for child-only policies while paying nearly $9.8 million in claims, he said the math would get worse if it were the only source of coverage.
Further, Perkins noted, the program was established to serve up to 5,000 persons in the commonwealth, and its current rolls include 4,800 members, making it imperative that private insurers take up some of the slack.
Clark's order came with some provisions that the insurance companies had requested a – notably, a defined enrollment period of January each year.
The order also provides guidance on rate adjustments and requires insurers to set rules to discourage consumers from dropping coverage after medical services have been received. In addition, it prevents applicants from being steered to the guaranteed issue market when other options are available, requires a mechanism to obtain coverage outside open enrollment for certain qualifying events and allows insurers to limit the number of plans offered to applicants under age 19.
Nevertheless, in issuing the order, Clark was clear that the insurers' decisions to cease offering child-only policies to new applicants was a violation of Kentucky law. The order, therefore, was a compromise that brought private insurers back into the market.
"Insurers consistently told us that they wanted a level playing field. I believe this order is fair to insurers and offers Kentucky families the opportunity to obtain medical coverage for children in that age bracket, both healthy and unhealthy," Clark said.