If you experienced any surprises with your health insurance over the past year – for example, you discovered that your doctor wasn’t part of the network or your deductibles were too high to handle – open enrollment is your once-a-year opportunity to make a change. Even if you liked your coverage during 2015, it’s a good idea to…
Stay with me and I promise this will get interesting. But first, let’s talk about insurance basics which include spreading risk among large groups. In this way, the insurance premiums paid by one person help pay for the loss claims of another. While this does apply to all types of insurance, let’s get specific about how it applies to health insurance: because it is likely that every person at some point will get sick, be injured, or even become disabled, sharing the risk is a critical part of health insurance. When the risk is shared, the group with the lower health care spend can also benefit from lower premiums which, in turn, benefits the entire group.
If you were wondering what all the fuss about enrolling young adults or “young invincibles” into insurance coverage was all about, the answer is pretty simple. Enrolling young adults is considered key to the success of national health care reform because, as a group, they tend to use fewer health care services than more senior adults. The more healthy young adults participating in the risk pool, the lower premiums can be for the entire group.
What does this have to do with children’s health insurance? Well, there was an era back in the day (okay, as recently as the 1990s) when a really smart group of people (I admit participating but I wasn’t one of the really smart ones) thought it was a shame that dependent children were subsidizing their parent’s health insurance. After all, kids are basically healthy, in need of relatively inexpensive primary care, and rarely hospitalized. It made sense to us to pull children out of the “all ages” risk pool that they were sharing with their parents and other adults, and give them their own risk pool in the form of child-only health insurance. This also provided an opportunity to design a benefit package and delivery system that was ideal for children.
Our little experiment in Florida worked. The premium charged for child-only coverage was less than half of what insurers were charging for dependent coverage in traditional health insurance and the benefits and delivery system were exactly what kids needed! We have been celebrating this success for the past 22 years.
Now, pulling a small number of the young and healthy of any age out of the all-ages risk pool would have a minimal impact on overall premiums, but it would still tend to increase premiums for that group over time if the practice continued.
Now imagine pulling millions of children from the all-ages risk pool nationwide (you don’t have to be an actuary to see where I am going with this). We may have unintentionally raised premiums for everybody else in the country that was not in a child-only risk pool. In the process of doing so, did we also unintentionally cause premiums to be more and more out of reach for the healthy young adults, causing them, as a group, to opt out of health coverage more and more frequently? Did we undermine the U.S. health care system by conducting an experiment here in Florida that resulted in a nationwide practice to establish child-only coverage options?
I think there were plenty of other forces at work, but we sure didn’t help strengthen the all-ages risk pool by starving it of young healthy lives to share the burden of health risk. And let’s not pretend that we only enrolled uninsured children with no other access to health insurance into the child-only pool. Even if a child was uninsured at the time of initial enrollment, it is likely they stayed in the child-only pool even when other insurance options became available for parental consideration.
If the young invincibles are so critical to the success of national health care reform, does it also make sense that restoring children to the all-ages risk pool would even further its chance of success? I think it does. The key to doing this successfully would be to preserve the child-centric benefits and delivery systems that have served children so well.
About The Author: Rose Naff currently serves as CEO of Florida Health Choices, Inc. and is building Florida’s Health Insurance Marketplace. Launched in 2014, the Marketplace can fill gaps in other healthcare coverage while additional phases are being built. Go to www.myfloridachoices.org to learn more.