Tuesday, July 27, 2010

qotd: Private insurers shut doors on children with preexisting disorders

The New York Times
March 30, 2010
Insurers to Comply With Rules on Children
By Robert Pear

Under pressure from the White House, health insurance companies said Tuesday (March 30) that they would comply with rules to be issued soon by the Obama administration requiring them to cover children with pre-existing medical problems.

"Health plans recognize the significant hardship that a family faces when they are unable to obtain coverage for a child with a pre-existing condition," said Karen M. Ignagni, president of America's Health Insurance Plans, a trade group. Accordingly, she said, "we await and will fully comply with" the rules.

The White House immediately claimed victory.

In a Twitter message, Robert Gibbs, the White House press secretary, scored the tug of war as "Kids 1, insurance 0."


July 27, 2010
Some insurers stop writing new coverage for kids
By Ricardo Alsonso-Zaldivar

Starting later this year, the health care overhaul law requires insurers to accept children regardless of medical problems - a major early benefit of the complex legislation. Insurers are worried that parents will wait until kids get sick to sign them up, saddling the companies with unpredictable costs.

The major types of coverage for children - employer plans and government programs - are not affected by the disruption. But a subset of policies - those that cover children as individuals - may run into problems. Even so, insurers are not canceling children's coverage already issued, but refusing to write new policies.

In Florida, Blue Cross and Blue Shield , Aetna, and Golden Rule - a subsidiary of UnitedHealthcare - notified with the insurance commissioner that they will stop issuing individual policies for children, said Jack McDermott, a spokesman for McCarty.

(Blue Cross and Blue Shield of Florida) vice president Randy Kammer said the company's experts calculated that guaranteeing coverage for children could raise premiums for other individual policy holders by as much as 20 percent.

"We believe that the majority of people who would buy this policy were going to use it immediately, probably for high cost claims," said Kammer. "Guaranteed issue means you could technically buy it on the way to the hospital."

Kammer said the company did not make the decision lightly. "We were looking at all our other individual policy holders who pay a lot for coverage, and we didn't think it was fair to give them that kind of an increase to benefit a small population that receives a greater advantage than they do," she said.

Comment:  In several speeches about the Patient Protection and Affordable Care Act, President Obama extolled the immediate end of insurers denying coverage to children with preexisting conditions. He was wrong. His miscalculation stems from the fact that he seemed to trust the insurers to do the right thing for patients instead of continuing to place their own business interests first.

Although the insurers can no longer reject a child with preexisting disorders, they can close the plan to new enrollees. As a business decision, that is what many are doing. A social good is not part of their business model.

Although White House press secretary Robert Gibbs scored this as "Kids 1, Insurance 0," it's really "Insurance 1, Kids disqualified." 

That the insurers placed business first should come as no surprise to anyone. AHIP's lobbyist Karen Ignagni continued with the "await and comply" position on the regulations that former WellPoint vice president Liz Fowler is helping to write. Compliance is easy for them when the rules are written to support the insurers' business model.

Proving that the private insurers have learned nothing, Blue Cross and Blue Shield of Florida vice president Randy Kammer repeats the long held position of private insurers that they didn't think that it was fair to increase premiums for all of the policy holders merely "to benefit a small population that receives a greater advantage" than the rest of the policy holders. Because it interferes with their business model, they refute the fundamental principle that the primary purpose of health insurance is to transfer funds from the many willing who are healthy to the few who have greater health care needs.

The exchanges won't be in effect until 2014, and yet we're already seeing this sterile, perverse behavior on the part of the insurers. Denying children with health care needs the right to buy insurance is only the bare beginning. There is absolutely no way that the regulators can preempt the negative impact of the unlimited innovations that insurers will introduce, especially after the insurance exchange infrastructures are solidly in place.

Businesses do what businesses have to do. Voters need to do what voters have to do. We have to eliminate the private business intermediaries and establish our own public insurance program that has a social mission of patient service.

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