First Implementation Challenge: Closing The Pre-Existing Condition Loophole For Children

Robert Pear has a good article in today’s New York Times outlining some of the challenges of implementing all of the regulations in the new health care reform law. One of the first shoes to drop, so to speak, is the loophole that would allow insurers to deny coverage to newly insured children with pre-existing conditions. This reality stands in contrast to how Democrats and the President described the provision. Reformer advocates, including yours truly, had argued that the new health law would prohibit insurers from denying coverage to children with pre-existing conditions six months after the law is enacted. The actual text of the legislation, however, only prohibits insurers from denying coverage for pre-existing conditions to kids who are already insured; uninsured children could still be denied coverage until the exchanges and most of the insurance reforms are operational in 2014. From Pear’s write up:

The authors of the law say they meant to ban all forms of discrimination against children with pre-existing conditions like 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. To insurance companies, the language of the law is not so clear.

To clarify their intent, the Department of Health and Human Services will close the loophole by issuing regulations “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.” The regulations will depart from the exact language of the law and could be vulnerable to a legal challenges, but most health care experts I’ve spoken to are fairly confident that the new rules would pass the so-called Chevron test — named for a Supreme Court decision which found that federal agencies hold broad authority in interpreting statues as long as that interpretation is found to be reasonable.

Insurers will likely accept the new rules and simply increase premiums as a result. They’ve spent the last year cleaning up their image and certainly don’t want to be caught in a nasty public relations battle in which they’re on the side of denying health care coverage to sick children. After all, they’re for new insurance regulations as long as they’re paid for by the beneficiary.

Thus, parents with children suffering from pre-existing conditions might have to do a bit of cost-comparison shopping to decide if it’s cheaper to purchase a family plan in the individual health insurance market or buy coverage for their children in the new national high risk pool program. That program is scheduled to begin in less than 90 days and is open to individuals who have “not been covered under creditable coverage” “during the 6-month period prior to the date on which such individual is applying for coverage through the high risk pool.” The high risk pool will adopt rate limits that that vary based on geographic location and may prove provide an affordable option for some families.