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Adoption would sever your daughters legal rights as a legal parent. She and her baby would be "legal strangers".
Why do you need guardianship or adoption at all? Health insurence isin't really a good enough reason to force your daughter to loose her child forever. Health insurence is readily avaliable for teen moms through medicade. Just take her to a local WIC office, they should have information about those programs.
I also assumed that sence your daughter is a minor - if your medical insurence is covering her - it would also automatically cover the baby - until she reaches the age of adulthood - or 25 depending on if she is in school or not. It should atleast cover pre-natal care and birth exc. My 21 year old cousin who is in college just had a little boy - who is fully covered by her fathers medical plan.
I would also suggest that you get your daughter enrolled in a parenting course - they have courses specifically for young parents - to learn essentials.
Oh and in most states you - the grandparent - have ZERO say in the outcome of your daughters pregnancy. Pregnant teens are medically emancipated. They can make all decisions - free of your knowledge or consent or approval - about thier pregnancy and parenting plans. YOU specifically have no say in what her plans are - weather they be parenting or adoption or abortion.
If I were you - I would support your daughter - and help her raise her baby like any decent parent would do. In a few VERY SHORT years she will be an adult woman who is capable of being a responsible parent. She will be 17 when the baby is born - and almost college graduate aged by the time the baby goes to school. She has time to GROW into a proper parent - she might just need a bit of help and support - that doesn't include severing her role as mother to her own child - to get there.