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Administration, Insurers At Odds Over Children's Pre-existing Conditions

By Jane Norman, CQ HealthBeat Associate Editor

March 25, 2010 -- Health and Human Services officials plan to issue a regulation that specifically states that health insurance companies must offer coverage to children with pre-existing conditions.

But the insurance industry has a different view of the language about health status that was written into the health care overhaul measure, and the clash has produced tensions over a law that's barely 48 hours old.

The HHS move came after questions emerged about whether the health care overhaul law (PL 111-148) is clear enough when it comes to insurance company denials of coverage to children with medical conditions.

Democrats and President Obama repeatedly have said children with medical conditions will be among the prime beneficiaries of the new law. "This year, tens of thousands of uninsured Americans with a pre-existing condition and parents whose children have a pre-existing condition will finally be able to purchase the coverage they need," the president said Tuesday.

At a rally with House Democrats on Saturday, he said "those same parents who are worried about getting coverage for their children with preexisting conditions now are assured that insurance companies have to give them coverage, this year."

Insurers, however, say that the law clearly states that so-called "guaranteed issue" does not kick in until 2014, meaning that companies at that time will have to accept all applicants regardless of their health status. They will be unable to refuse coverage because of any person's pre-existing condition. That's why an individual mandate also is included in the law, so that insurance company risk pools are made up of healthy people as well as sick people.

What's required this year is that if companies decide to offer new coverage to families with children, or if the family already is covered, the children's pre-existing conditions can't be excluded from a policy, said Robert Zirkelbach, a spokesman for America's Health Insurance Plans (AHIP), which represents the industry. "Starting in six months, if health plans are going to offer coverage to somebody, they can't impose any exclusions on pre-existing conditions for that person," he said.

Zirkelbach said he couldn't quantify the impact if insurers instead have to accept all children for coverage regardless of their health status. There would be costs associated with it, he said.

The insurers' perspective is not the intent of the law, Democrats responded, and they'll seek regulations to specify that children with medical conditions will be able to obtain health insurance.

Nicholas Papas, a spokesman for HHS Secretary Kathleen Sebelius, said the law is clear. "Insurance plans that cover children cannot deny coverage to a child because he or she has a pre-existing condition," he 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."

The three committee chairmen who oversaw the writing of the law also issued a joint statement saying that the intent of the law is to offer coverage to children right away.

"Under the legislation that Congress passed and the president signed yesterday, 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," said George Miller of California, Sander Levin of Michigan and Henry Waxman of California.

"We fully expect that this legislation will prevent insurance companies from denying coverage. The concept that insurance companies would even seek to deny children coverage exemplifies why we fought for this reform effort and will continue fighting to ensure all Americans have access to high quality, affordable care."

Advocates for children said that insurers are already trying to game the law. "It is disappointing that insurance companies continue to look for opportunities to deny coverage to this vulnerable population," said a joint statement from the advocacy groups First Focus and Family Voices.

"Instead of parsing the language of the law to deny coverage, we are hopeful that insurance practices will quickly be revised to meet the intent of Congress," they said.

Bruce Lesley, president of First Focus, said that the group has asked for a legal opinion on the language from a law school expert, and is urging the administration to move quickly on issuing a regulation, since the regulatory process can be time-consuming.

Lesley said that if the insurance industry's approach on the law is followed it could lead to all kinds of difficult situations, such as denial of care to a newborn with medical problems because the infant would be a new beneficiary under a family policy.

"The intent," he said, "is to protect kids with pre-existing conditions, period, not just in certain circumstances."

White House Press Secretary Robert Gibbs said the law is clear, although a regulation will be issued, just as regulations will be issued on other parts of the overhaul. "If there is any ambiguity," Gibbs said, the regulations "will clearly denote that somebody that offers a plan that covers children cannot deny anybody coverage based on a preexisting condition."

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