Insurers Dispute Health Bill’s Mandate to Cover Children with Pre-Existing Conditions

Jodi Jacobson

Kaiser Health News reports today that the insurance industry lobbyists claim the health reform bill signed by President Obama this week lacks a clear mandate for immediate coverage of children with pre-existing conditions, potentially leaving these children vulnerable for four more years.  The Administration says it will fix the loophole.

Kaiser Health News reports today that the America’s Health Insurance Plans (AHIP), an insurance industry lobbying group, claims the health reform bill signed by President Obama this week lacks a clear mandate for immediate coverage of children with pre-existing conditions, leaving these children vulnerable for four more years.

[H]ealth advocates and some insurers say the law does not clearly state that such protection starts this year. If it doesn’t, uninsured children with pre-existing conditions might not get help until 2014, when the law requires insurers to issue policies for all applicants regardless of health condition. There is no doubt that for children who are enrolled in insurance plans, the new law bars insurers from excluding coverage of any pre-existing conditions.

According to the authors of the KHN article, Phil Galewitz and Andrew Villegas, America’s Health Insurance Plans, the main insurance lobbying group, says through a spokesman that “it interprets the new law as not requiring insurers to cover all child applicants this year.”

Randy Kammer, a vice president for Blue Cross and Blue Shield of Florida, the largest health insurer in that state, said she interprets the law as allowing insurers to reject coverage for children in some cases until 2014.

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Earlier this week, write Galewitz and Villegas, “some health advocates said they worried the health overhaul might not do what was intended.”

“This could be a large loophole,” Janis Gurney, public policy co-director of Family Voices, said Tuesday. The organization, based in Albuquerque, N.M., represents families of children with special needs.

But, KHN reports, officials said Wednesday the law does prohibit insurers from denying children coverage starting this year, but they will issue clarifying regulations.

“The law is clear: Insurance plans that cover children cannot deny coverage to a child because he or she has a pre-existing condition,” Health and Human Services spokesman Nick Papas said. “To ensure that there is no ambiguity on this point, the Secretary of HHS is preparing to issue regulations next month making it clear that the term “pre-existing exclusion” applies to both a child’s access to a plan and to his or her benefits once he or she is in the plan.” 

KHN also quotes a joint statement by Reps. Henry A. Waxman (D-CA), Sander M. Levin (D-MI), and George Miller (D-CA), the Democratic chairmen of the three committees with jurisdiction over health policy in the House of Representatives:

“Under the legislation … plans that include coverage of children cannot deny coverage to a child based upon a pre-existing condition. We have been assured by the Department of Health and Human Services that any possible ambiguity in the underlying bill can be addressed by the Secretary with regulation.”

AHIP and others are warning that being required to cover children with pre-existing conditions will lead to increased insurance premiums and argue for a delay in required coverage.

Health insurers worry that if they’re forced to cover all children regardless of health condition, higher rates will result, because only the families of sick kids would apply. That problem, they say, could be largely avoided if the requirement went into effect in 2014, when most Americans will have to have coverage under the law. AHIP says higher rates resulted when New York and a handful of other states enacted “guarantee-issue” laws requiring insurers to offer coverage to all applicants.

“It is important to keep in mind the experience in states that implemented guarantee – issue laws without getting everyone covered, and the impact those reforms had on the affordability of health care coverage,” said AHIP spokesman Robert Zirkelbach.

The new health reform law requires insurers to cover children who do not have a large gap in coverage, leaving more vulnerable those whose parents buy coverage for children on the individual market and whose children have been uninsured more than two months. Federal law requires insurers to cover children who do not have a large gap in coverage.

One thing is clear, states KHN: “The law does nothing to stop insurers from charging higher rates for children with pre-existing illnesses until 2014 when insurers can no longer use health status in setting premiums.”

Rising insurance premiums have indeed led to record profits by insurance companies.  Triangle Business Journal reports that according to the Washington, D.C.-based Health Care for America Now, the five largest U.S. health insurance companies – including four of the five largest insurers in the Raleigh-Durham area – had a combined profit of $12.2 bilion in 2009.

The group said that was a 56 percent jump from 2008.

The companies are UnitedHealthGroup Inc., WellPoint Inc., Aetna Inc., Humana Inc. and Cigna Corp.

Joan Alker, co-executive director of the Center for Children and Families at Georgetown University in Washington D.C., is among those worried about the language. After learning of the administration’s comments Wednesday, she said, “It is clear they are looking at this, which is good, and it is a very complex and technical issue so I think at this point we will wait and see what happens.”

KHN reports that “Parents whose kids are turned down by an insurer would still have a fallback under the law, even without a regulatory fix. They could seek coverage through an insurance pool for people who can’t obtain coverage. The federal government will support the pool with $5 billion.”

It’s not known how many children are currently denied coverage because of pre-existing conditions. But it’s a common complaint.

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