Legal, but not necessarily smart

Well, the ink on the law may not be dry yet, but it appears that insurance companies may already be looking for loopholes in the Affordable Care Act:

Insurers agree that if they provide insurance for a child, they must cover pre-existing conditions. But, they say, the law does not require them to write insurance for the child and it does not guarantee the “availability of coverage” for all until 2014.

So basically, they are saying that the law tells insurance companies that they cannot decide not to cover certain conditions if they already cover the children through policies.  But – and this is important – they are saying that nothing in the law says they are obligated to cover any children they don’t already cover.

That’s what is known as a “guaranteed issue”, and one does exist in the bill.  It just doesn’t go into effect until 2014, when the exchanges go online.  Without a guaranteed issue, the pre-existing condition clause does little for families with children who are looking for insurance on the individual market.

How did this happen?  The NYT says:

As originally conceived, most of the new federal requirements would have taken effect at the same time, in three or four years. The requirements for people to carry insurance, for employers to offer it and for insurers to accept all applicants were tied together.

But as criticism of their proposal grew, Democrats wanted to show that the legislation would produce immediate, tangible benefits. So they accelerated the ban on “pre-existing condition exclusions” for children.

So some of the “t”‘s weren’t crossed.  It appears the ban on exclusions was accelerated without the guaranteed issue.

Is this a crappy mistake? Yes.  Should supporters of reform been more careful?  Yes.  But all laws are going to have loopholes.  It’s up to Congress to keep closing them, and they should for this one.  None of this surprises me.

What does surprise me is the tone-deafness of the insurance companies.  Really, is there any way they could make themselves look worse here?  They’ve waited barely a week before providing some validation for those who demonize them as looking for any way to game the system to put profits ahead of patients.  Not only that, but they decided to fire their first salvo at sick children.  Seriously, is there any way they could make themselves look worse?

It’s like they are trying to lend support to those who hate them the most.

UPDATE: Eagle-eyed Austin Frakt points me to this:

To clarify their intent, the Department of Health and Human Services will close the loophole by issuing regulations “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 regulations will depart from the exact language of the law and could be vulnerable to a legal challenges, but most health care experts I’ve spoken to are fairly confident that the new rules would pass the so-called Chevron test — named for a Supreme Court decision which found that federal agencies hold broad authority in interpreting statues as long as that interpretation is found to be reasonable.

Insurers will likely accept the new rules and simply increase premiums as a result. They’ve spent the last year cleaning up their image and certainly don’t want to be caught in a nasty public relations battle in which they’re on the side of denying health care coverage to sick children. After all, they’re for new insurance regulations as long as they’re paid for by the beneficiary.

Igor Volsky is asserting that HHS will change the meaning of “pre-existing condition” so that it will close the loophole.  He also believes that the insurance companies will play ball because they don’t want to look as bad as I said they would above.  Even if they do, he’s right that they will jack up the rates to compensate for it – another thing they can do until 2014 with impunity.

But I’m not that sure.  There’s no reason they can’t challenge the regulations in court and drag this out a few years, say until 2014 when it all becomes moot.  I think they may be just that tone-deaf.

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