Days after President Obama signed the new health-care law, insurance companies already are arguing that, at least for now, they do not have to provide one of the benefits that the president calls a centerpiece of the law: coverage for certain sick children
WASHINGTON — Days after President Obama signed the new health-care law, insurance companies already are arguing that, at least for now, they do not have to provide one of the benefits that the president calls a centerpiece of the law: coverage for certain sick children.
At issue is how the industry has to treat children with pre-existing medical conditions.
Obama, speaking at a health-care rally in Northern Virginia on March 19, said, “Starting this year, insurance companies will be banned forever from denying coverage to children with pre-existing conditions.”
Authors of the law say they meant to ban all forms of discrimination against children with pre-existing conditions such as asthma, diabetes, birth defects, orthopedic problems, leukemia, cystic fibrosis and sickle-cell disease. The goal, they say, was to provide those youngsters with access to insurance and to a full range of benefits once they are in a health plan.
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To insurance companies, the language of the law is not so clear.
Insurers agree that, if they provide insurance for a child, they must cover pre-existing conditions. But, they say, the law does not require them to write insurance for the child and that it does not guarantee the “availability of coverage” for all until 2014.
“The fine print differs from the larger political message,” said William Schiffbauer, a lawyer whose clients include employers and insurance companies. “If a company sells insurance, it will have to cover pre-existing conditions for children covered by the policy. But it does not have to sell to somebody with a pre-existing condition. And the insurer could increase premiums to cover the additional cost.”
Congressional Democrats were furious when they learned that some insurers disagreed with their interpretation of the law. “The concept that insurance companies would even seek to deny children coverage exemplifies why we fought for this reform,” said Rep. Henry Waxman, D-Calif., chairman of the Energy and Commerce Committee.
Sen. Jay Rockefeller, D-W.Va., chairman of the Senate commerce committee, said: “The ink has not yet dried on the health-care reform bill, and already some deplorable health-insurance companies are trying to duck away from covering children with pre-existing conditions. This is outrageous.”
The new law says health plans and insurers offering individual or group coverage “may not impose any pre-existing condition exclusion with respect to such plan or coverage” for children younger than 19, starting in “plan years” that begin on or after Sept. 23, 2010.
But, insurers say, the law does not require them to write insurance at all for the child or the family until 2014. In the lingo of insurance, the law does not include a “guaranteed issue” requirement before then.
Consumer advocates worry that, instead of refusing to cover treatment for a specific pre-existing condition, an insurer simply might deny coverage for the child or the family.
“If you have a sick kid, the individual insurance market will continue to be a scary place,” said Karen Pollitz, a research professor at the Georgetown University Health Policy Institute.
Experts at the National Association of Insurance Commissioners share that concern.
“I would like to see the kids covered,” said Sandy Praeger, the insurance commissioner of Kansas. “But without guaranteed issue of insurance, I am not sure companies will be required to take children under 19.”
The Obama administration plans to issue regulations setting forth its interpretation. But lawyers said the rules could be challenged in court if they went beyond the law or were inconsistent with it.
Starting in January 2014, health plans will be required to accept everyone who applies for coverage.
Until then, people with pre-existing conditions could seek coverage in high-risk insurance pools run by states or by the secretary of health and human services. The new law provides $5 billion to help pay claims filed by people in those pools.
Federal officials will need to write rules or guidance to address a number of concerns. Issues to be resolved include defining the “essential health benefits” that must be offered by all insurers, deciding which dependents are entitled to stay on their parents’ insurance, determining who qualifies for a “hardship exemption” from the requirement to have insurance, and deciding who is eligible for a new long-term-care insurance program.
As originally conceived, most of the new federal requirements would have taken effect at the same time, in three or four years. Insurance companies would have to meet stringent federal standards in order to sell insurance in a new marketplace known as an insurance exchange. The requirements for people to carry insurance, for employers to offer it and for insurers to accept all applicants were tied together.
But as criticism of their proposal grew, Democrats wanted to show that the legislation would produce immediate, tangible benefits. So they accelerated the ban on “pre-existing condition exclusions” for children.
Consumers soon will gain several other protections. By July 1, the secretary of health and human services must establish a Web site where people can identify “affordable health insurance coverage options.”
In addition, within six months, health plans must have “an effective appeals process,” so consumers can challenge decisions on coverage and claims.