Sick kids get new insurance protections, but hurdles remain

Kaiser Health NewsSeptember 23, 2010 

WASHINGTON — When an insurance company refused to cover Deborah Gustlin's son because he has Asperger's syndrome, she took a drastic step.

"I decided to lie," said the 51-year-old resident of Morgan Hill, Calif. She applied to another insurer, didn't disclose that Benjamin, 11, has a form of autism and got him covered. She doesn't submit claims related to Asperger's, but "at least I have coverage for him if he breaks his arm."

Such subterfuge is no longer necessary. A provision of the new health care law that bars insurers from denying coverage of children up to age 19 who have pre-existing medical conditions took effect Thursday. Parents of sick children may still find other challenges, however, including the availability and cost of the coverage.

"You may have policies that are available to you, but will it be affordable? The reality is it may not be," said Brian Webb, the manager of health policy and legislation for the National Association of Insurance Commissioners.

Jennifer Howse, the president of the March of Dimes Foundation, said that while she strongly supported the provision, she was worried that the policies "may be prohibitively expensive," in part because federal subsidies and limits on out-of-pocket costs won't kick in until 2014. She's also concerned that some insurance companies have decided to stop selling policies for children only. Child-only policies make up about 8 percent to 10 percent of the individual insurance market.

For years, insurers — principally those in the individual market — have denied coverage to children, as well as adults, who have medical conditions. In some cases, they've accepted them but refused to cover their pre-existing conditions for a set period. Now such practices are banned for children, and they'll be prohibited for adults in 2014.

The Department of Health and Human Services, which is writing the regulations to implement the law, estimates that 31,000 to 72,000 uninsured children with pre-existing conditions will gain coverage because of the provision between now and 2013, and 90,000 insured children will get coverage for pre-existing conditions that previously had been excluded.

The new rules apply to employer-sponsored health plans and new individual policies. The vast majority of the uninsured children who will benefit are in families that buy policies on the individual market; most employer-sponsored plans cover people who have pre-existing conditions, though they sometimes delay covering the conditions.

The cost of coverage could depend on where the family lives.

The administration has estimated that the cost of getting insurance for a child probably will be no more than double the standard rate for a healthy child, and less than that in some states. Jennifer Tolbert of the nonpartisan Kaiser Family Foundation said that "while families will likely have to pay more to cover a sick child who had previously been denied coverage, the benefits of having a child insured are significant." (Kaiser Health News is part of the foundation.)

"Some states are looking at limiting the amount that a plan can charge an individual family for enrolling a child with a pre-existing condition," said Sabrina Corlette, a research professor at the Health Policy Institute at Georgetown University. Insurers also could decide to spread the risk among a pool of applicants, which would lower premiums.

Other states take a hands-off approach to insurance rates.

"If you have somebody coming with juvenile diabetes, they'll be rated based on that fact," said Webb of the National Association of Insurance Commissioners. "It could be very unaffordable."

Under HHS's regulations, insurers will set up open-enrollment periods, specific times when children who have pre-existing conditions can be enrolled. The goal is to make sure that parents don't sign up their children only when they get sick. That causes "adverse selection," and can doom an insurance plan. However, it isn't clear exactly how the open-enrollment period will work — or what would happen if families wanted to sign up their children outside of the open-enrollment period.

An administration official said HHS was trying to protect children but also wanted to ensure that carriers didn't abandon the market because of financial perils.

Some parents have had to make difficult decisions to try to get coverage for their sick children. Last November, Nicole Romano, 33, gave birth to her son, Grayson, three months early. He weighed 1 pound, 8 ounces, and has required intensive medical treatment. In May, Romano, who lives in Myrtle Beach, S.C., and was working at a small advertising agency, lost her health care coverage when her boss ended it for all employees.

She and her husband decided it would be too expensive to add their two children and her to his coverage, so she applied for a family policy in the individual market. The insurer accepted her 6-year-old daughter and her but rejected her premature son, saying he didn't reach height and weight requirements.

So "we pay everything out of pocket," she said, including equipment such as an apnea monitor; which measures the oxygen level in Grayson's blood, and home oxygen tanks. In July, when Grayson got sick, the couple ran up $3,500 in medical bills.

Meanwhile, Romano decided to switch jobs, in part to get her son enrolled in a group health plan. She and her children will get coverage beginning in November. However, given the new requirement that insurers cover sick children, she wonders whether she could get a better deal on the individual market.


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