Despite Administration “Win,” Some Sick Kids Will Remain Uninsured

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Policy can never be separated from politics and this morning we got another reminder.

After the New York Times reported yesterday that insurers might try to avoid issuing policies for kids with pre-existing conditions – despite that the reform law meant to prohibit this – the AP reports this today:

After nearly a year battling President Barack Obama and congressional Democrats over the health care overhaul, the insurance industry says it won’t block the administration’s efforts to fix a potentially embarrassing glitch in the new law.

In a letter to Health and Human Services Secretary Kathleen Sebelius, the industry’s top lobbyist said Monday insurers will accept new regulations to dispel uncertainty over a much-publicized guarantee that children with medical problems can get coverage starting this year.

Quick resolution of the doubts was a win for Obama — and a sign that the industry has no stomach for another war of words with a president who deftly used double-digit rate hikes by the companies to revive his sweeping health care legislation from near collapse in Congress.

A “win” for Obama? Well yes. The Administration is enjoying a day of headlines trumpeting its victory over insurance companies. The headline in Politico’s daily health care e-mail blast was “SEBELIUS LAYS DOWN THE LAW.” Pretty tough stuff. Plus, the clarification means Democrats will still be able to tout this immediate benefit of health reform during this year’s congressional campaigns. But is it a win for sick kids who can’t get insurance coverage? Maybe, in some cases.

Although insurers have promised to sell insurance policies to families with kids with pre-existing conditions, there is nothing to stop the insurance companies from charging whatever they want. Until 2014, insurers will still be allowed to set premiums rates in the individual market based on health status. For a kid with a bad health status – like cystic fibrosis, say, or cancer – that means very high premiums that families might still not find affordable. Insurers are not going to simply absorb the cost of covering these expensive cases; they will pass the expenses on to policy holders.

Of course, there aren’t many kids in this situation. The vast majority of kids with pre-existing conditions are covered by Medicaid, CHIP or employer-sponsored insurance. Only about 10% of children are uninsured and only a small percentage get their coverage in the individual market, where the pre-existing exclusion issue matters. But the parents of an uninsured middle-class kid with cancer are still going to face a pretty tough financial challenge buying coverage on the open market.

The pre-existing exclusion clarification is a start at helping these families, but it’s by no means a complete solution. In other words, a loophole remains and it’s one that won’t be closed for four more years.