Loophole May Delay Coverage for Some Kids

(CBS)  Like most 6-year-olds, Lucas Avant has few fears, but his parents worry more than most. Lucas has no health insurance. At 9 months old, doctors found he had a heart ailment.

They say he's now perfectly healthy, reports CBS News correspondent Ben Tracy, but he's been denied by six insurance companies because of his pre-existing condition.

"There's no reason why a healthy child should be denied health insurance that his family can pay for," says Lucas' father Jason Avant. "That seems absurd."

Complete Coverage: Health Care Reform

Democrats said health reform would fix this problem, forcing insurance companies to cover kids no matter what.

"This year, insurance companies will be banned forever from denying coverage to children with pre-existing conditions," said President Obama on March 19, 2010.

That's not how insurance companies see it. The bill says insurers "may not impose any pre-existing condition exclusion" for children under 19 as of Sept. 23, 2010. Insurance companies say that just means if they choose to cover a child they have to cover the pre-existing condition and its costs, but they don't actually have to offer new coverage to any child with pre-existing conditions until 2014.

More in "Users Guide to Health Care" Series:

Reform Won't Change Insurers' Profits Much
Health Reform Tweaks Seniors' Medicare
Primary Care Doctors Ask: Is it Worth It?
Uninsured? What the New Law Means for You
Already Insured? Get Ready to Pay More
Feds Eye Big Savings from Health Reform
How Health Reform Affects Small Businesses

Last week the Associated Press reported that spokespersons for two Congressional committees, controlled by Democrats, that helped write the legislation agreed with the insurance industry interpretation. Republicans say Democrats botched the language in the bill in their rush to pass it.

"Children will not get the coverage they were promised," said Rep. David Dreier (R-Calif.). "This is the inevitable result of a closed, partisan process."

The White House is scrambling sending a letter to the insurance industry to clarify the bill. "We don't want to leave any ambiguity," says Secretary of Health and Human Services Kathleen Sebelius. "This won't be up to insurance companies to interpret. Parents can rest assured."

The Insurance Industry Association says, "We will implement any revisions that are made." Meanwhile, the Avants are still waiting, hoping it's just months and not years until Lucas gets insured.

More Coverage of Health Care Reform:

Summary of What's in the Law
Provisions Which Take Effect in Short-Term
Read the Text (PDF): Complete Senate Bill | Reconciliation Measure

[babooph]

These companies bribed big time for these loopholes -time to suck in the cash-new pvt jets ,country club dues,mistress condos -all this stuff costs...

[tsigili]

Government needs to take steps to discourage those who cannot afford to provide for their kids, from having the kids, in the first place. Having kids you cannot adequately provide for, should be DISCOURAGED by government!

This has been going on far too long, and steps need to be taken to get the underprivileged kids from becoming a problem in the first place. Rather than giving people all kinds of tax breaks, and other benefits to encourage children, we SHOULD be doing exactly the opposite....discouraging children, by taxing more than one, and by taking away all those tax breaks, so having kids becomes much more RESPONSIBLE!

Then we won't be raising more generations of criminals, sociopaths, and the like.

[FightCognitiveDissonance]

Hahahahahaha. So the government shouldn't mandate us to have health insurance for anyone but we should do what China does and mandate people to not have children. Oh the hypocrisy.

Also the child isn't "underprivileged". The child just can't get care because the pre-existing condition. How does this even relate?

[vinnyb5]

AMEN BELOW!!!

Shut Up, He Argues
By Rich Lowry

Henry Waxman is peeved. He expects corporate America to swallow health-care reform without a peep of protest -- and, apparently, without revealing new costs to shareholders or the Securities and Exchange Commission.

Last week, AT&T announced it will take an immediate $1 billion write-down thanks to a new tax in the health bill that will cause Caterpillar ($100 million) and Deere & Co. ($150 million), among other large employers, to do the same. The benefits consultancy Towers Watson estimates that the change may reduce corporate profits by as much as $14 billion over time.

Receive news alerts

Sign Up

Rich Lowry RealClearPolitics
Health care

That's real money. For comparison: It's enough to bribe Sen. Ben Nelson of the Cornhusker Kickback 140 times over; it's three times the amount Democrats poured into a (failing) weatherization program that once was a highlight of the stimulus bill; it represents 10 percent of the supposed deficit reduction of health-care reform over 10 years.

It may be that the health bill's most immediate, high-profile effect is the destruction of shareholder wealth.

Not to fear. Waxman, the liberal lion who chairs the House Energy and Commerce Committee, is on the case. No, he doesn't want to change the tax provision -- he wants to browbeat the affected corporations. He has called the CEOs of AT&T, Caterpillar and Deere to testify before his committee, accompanying his summons with a far-reaching document request lest the corporations miss the point: This is naked political harassment.

Citing the Congressional Budget Office, Waxman says his concern is that the write-downs appear "to conflict with independent analyses." If he's genuinely surprised at the real world departing from CBO projections, he should brace himself for more shocks. Is he going to demand that OMB Director Peter Orszag testify when the projected deficit reduction doesn't materialize?

Waxman maintains his interest is ensuring the bill "does not have unintended consequences." Because an immensely complex bill of more than 2,000 pages would never have any of those, right?

But Waxman's vendetta and the offending write-downs are hardly unintended or unforeseen.

Democrats clearly plan to blame the private sector for all the downsides of their health plan. In a private lobbying session, President Obama told liberal lawmakers that the bill is only "a beginning." Any increase in costs and premiums -- both of which are inevitable -- will be attributed to corporate malfeasance requiring yet more government intervention.

Democrats can't say they weren't warned about the coming write-downs. Companies began to receive a tax-free, deductible subsidy in 2003 to continue prescription-drug coverage for their retirees, a ploy to keep the firms from dumping retirees into the new government prescription-drug program. Outside experts and big employers counseled against ending the deductibility, pointing out that it would adversely affect the companies' financial statements immediately. (Account- ing rules require corporations to note the long-term effect of the new liability right away.)

These warnings got shelved under a category ensuring their brusque dismissal: Information Inconvenient to the Passage of Health-Care Reform. Now that the prediction has come to pass, it's all AT&T's fault.

The companies will reconsider providing prescription-drug coverage for their retirees at all. The Employee Benefit Research Institute calculates that companies could now save $1,000 per beneficiary by handing them off to the government. As many as 2 million more retirees could end up on the government program, according to James Klein of the American Benefits Council. These retirees might wonder about the truthfulness of Obama's constant promise that everyone can keep his current insurance.

The CBO estimated that the new treatment of the subsidy would generate roughly $5 billion in revenue. If companies stop taking the subsidy, that revenue disappears -- while the costs of the drug program increase.

A Towers Watson study stipulates that "employer plans generally provide much better protection than the standard Medicare benefit." And subsidizing those employer plans is cheaper to the government than providing the coverage itself.

In short, a lose-lose-lose proposition -- no doubt, the first of many. Henry Waxman will be a busy man.

[pragmatist1]

Here's an analogy to this issue. A homeowner hasn't any insurance on their property. A tornado cause significant damage. The homeowner tries to get insurance to now cover their home, which is damaged, hoping to use the after-the-fact coverage to offset costly repairs to the damage. Homeowners who don't have insurance to protect themselves are irresponsible. The parents of this kid are irresponsible. Now they're trying to scam the system by expecting coverage for a known medical condition. Had they the insurance at the time of the kid's birth, the insurance company would be obligated to pay for medical treatment, which is technically a pre-existing condition because the knowledge of it superceeded any insurance coverage. As it is now, the insurance company shouldn't be held liable for the parent's disregard for safeguarding their kid's medical insurance and shouldn't be forced to cover the kid for the pre-existing medical condition.

[AveryEscape1]

No, an appropriate analogy would be that your home gets damaged by a tornado. You fix the damage and try to get insurance in case anything happens again as a result of anything. You get denied. You check around. Denied. You offer to take insurance that excludes tornado damage. Denied.

The kid is currently healthy. Insurance could cover everything unrelated including regular visits, vaccinations, other unrelated illness, accidents or injuries, etc. His parents are willing to pay for insurance, they just aren't allowed to currently.

Would this be a different issue if the kid just turned 18 and was denied coverage because his parents didn't insure him? He had no control over not having insurance to this point and let's say he has a job and wants to get it now. Is it his fault that he is apparently a "damaged" person and not worth anything to insurance companies?

[ge556]

Deb_B1,
What makes you think a loophole is different from an error in the law?

Truth Teller

[Deb_B1]

They had a YEAR of this being a KEY selling point of Health Care reform. Do you not see this as unconscionable that Congress managed to miss this error, even if the bill is 2,000 pages long!

The word was chosen to defer blame for their error. It's a loophole that insurance companies are using... No it's not it is an error that Congress made that insurance companies caught and brought to their attention.

[tsigili]

That's what happens when you try to do stuff behind closed doors. When you connive in back rooms, and do under the table deals, and cook up something that hasn't been closely examined by independent parties, you get it WRONG!

[FightCognitiveDissonance]

There were no backroom deals outside of anything usual in politics. If Republicans had actually played ball we would have had a much more optimal bill and a bipartisan solution. Instead they believed their own dogma and thought if they just pretended the bill didn't exist and voted against it it would go away. Now you hear about these "backroom deals" that didn't really exist and how its all "corrupt", etc, etc. because Republicans are stunned it passed and PISSED they missed the boat to get any of the provisions and things they could have added to the bill put in.

Wouldn't you be upset if you had the opportunity to work on a product to be sold for example that would make you and your imaginary partner lots of money and you realized you disagreed with your partner and rather than working through it you thought it was a lost cause and gave up the business venture. Then your partner sold it anyway and made millions of dollars you could have had. Whoops.

[dmwj2]

It is very hard for me to believe, but here we are. America is doomed. This story reports that big insurance has already sniffed out a possible loophole allowing them to CHOOSE to deny coverage to CHILDREN that need it. So where is the anger directed? Not NEARLY enough at big insurance. Many of you are posting garbage like "the loophole was put in the legislation purposely" and "it is the dems fault that they rushed it through behind closed doors." That is rubbish! If you really think the dems or repubs want to hurt people, you are crazy. And, from my point of view, we have had more than enough time to draft this legislation... as far as the repubs being locked out... They CHOSE to be locked out. At any rate, who is to blame for big insurance pouring over the legislation purposely seeking a way to deny coverage? This country is in a sad situation. I am all for free enterprise, RESPONSIBLE capitalism, progress and reaching for the future... but NOT by climbing over the dead bodies of my fellow Americans!

[Deb_B1]

Congress made the error. No one has used this error to deny coverage. Looks like someone was nice enough to let congress know they screwed up.

How do you know they were pouring over it looking for ways to deny coverage? They have to follow the law so they have to pour over it.

Congress screwed up. At least face that fact let them fix it and move on. Why do they always blame someone else for their errors.

[dmwj2]

@Deb - please do not respond to my posts... you are a lost soul. Your hate for the dems has poisoned you... may God have pitty on you...

[midlclass]

this is a very disgusting show of insurance companies idealologies see it really is about the money and not people. keep it up your rearing your ugly faces more and more. and the more you do the regulation on your a$$e$$t there will be. funny too how the republicans will point fingers again but would any of these nay sayers introduce legislation to correct this loophole?

[Deb_B1]

CBS has been about 5 day behind on reporting on this issue. At that they spun to be the insurance companies as the bad guys.

Congress made the error by not putting the language in the bill that would cover the children. Either way, the error has already been fixed. Expect CBS to report the correction in about 4 - 5 days as that is about how far behind they are on this CONGRESSIONAL ERROR.

[ky46]

article in todays 'commercial appeal' memphis, tn.
insurance rates expected to rise 17% for people under 30?
how is this a reflection of 'better' since the passage of 'healthcare reform'?
I thought the addition of 'mandatory' insurance was going to lower cost for everyone.

[SueZeeeQue]

This bill covers millions of children who weren't covered before.


Now the very same nuts who fought bitterly against this bill are coming here to whine about a loophole.


Their hypocrisy is surpassed only by their stupidity.