Tuesday, March 30, 2010

In Quick Retreat, Insurers Say They’ll Cover Sick Kids After All

Arrogance allows you to do just about anything and think you can get away with it. For years, health insurers have swaggered about, callously raising premiums through the roof, dropping sick people from coverage and refusing to cover folks with pre-existing conditions. They got away with it. But not yesterday.

After media reports surfaced that big insurance companies claimed a loophole in the new health care reform law would allow them to deny coverage to children with pre-existing conditions, the—well you know—hit the fan. Picking on sick kids is like kicking a dog or stealing Grandma’s purse. It doesn’t sit well with most Americans.

After mounting public outrage and a strongly worded letter from Health and Human Services Secretary Kathleen Sebelius, the insurance industry quickly reversed course and promised to cover kids with pre-existing conditions beginning Sept. 23 as the new law requires. In a letter to the industry group American Health Insurance Plans (AHIP), Sebelius wrote:

Health insurance reform is designed to prevent any child from being denied coverage because he or she has a pre-existing condition…Now is not the time to search for nonexistent loopholes that preserve a broken system.

To ensure that there is no ambiguity on this point, I am preparing to issue regulations in the weeks ahead ensuring that the term ‘pre-existing condition 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.

In response, AHIP President Karen Ignagni wrote:

We await and will fully comply with regulations consistent with the principles described in your letter.

But she also wrote that insurance companies would be analyzing how much it would cost to comply-code words for “rate hike.”

At FireDogLake David Dayen lays out a likely scenario.

You can pretty much figure out AHIP’s game here. With no restrictions on cost until 2014, the industry can raise their premium prices almost at will. Even the bad publicity suffered from that 39 percent rate hike of Anthem Blue Cross plan has stopped that scheduled increase from taking effect in May. And when outrage is expressed by families facing double-digit rate hikes, AHIP will clear their throats and blame the pre-existing condition exclusion for exclusion for children, forcing the poor insurance companies to take on a sicker risk pool and raise prices to survive.

It takes a long time to beat down world class arrogance.

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