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," says 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 won’t be necessary beginning today. A provision of the new health care law that bars insurers from denying coverage of children up to 19 with preexisting medical conditions takes effect. But parents of sick children may still find other challenges, 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," says Brian Webb, manager of health policy and legislation for the National Association of Insurance Commissioners.
Jennifer Howse, president of the March of Dimes Foundation, says that while she strongly supports the provision, she’s 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 discontinue the sale of policies for children only. Child-only policies make up about 8 to 10 percent of the individual insurance market.
For years, insurers – principally those in the individual insurance market -- have denied coverage to children, as well as adults, with medical conditions. In some cases, they have accepted them but refused to cover their preexisting conditions for a set period. Now, such practices are banned for children, and will be prohibited for adults in 2014.
The Department of Health and Human Services, which is writing the regulations implementing the law, estimates that 31,000 to 72,000 uninsured children with preexisting conditions will gain coverage due to the provision between now and 2013. And 90,000 insured children will get coverage for preexisting conditions that have been excluded from coverage, the department estimates.
The new rules apply to all 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 with preexisting conditions, though they sometimes delay coverage of the conditions.
The administration has estimated that the cost of getting insurance for a child will likely be no more than double the standard rate, and in some other states, less than that. Jennifer Tolbert of the nonpartisan Kaiser Family Foundation says 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.” (KHN is part of the foundation.)
The cost of coverage could depend on where the family lives. “Some states are looking at limiting the amount that a plan can charge an individual family for enrolling a child with a preexisting condition,” says Sabrina Corlette, a research professor at the Health Policy Institute at Georgetown University. Insurers could also decide to spread the risk among a pool of applicants, which would lower premiums.
Other states take a hands-off approach to insurance rates. "So if you have somebody coming with juvenile diabetes, they’ll be rated based on that fact," says Webb of the NAIC. "It could be very unaffordable."
Under the department’s regulation, insurers will set up open-enrollment periods – a specific period when children with preexisting 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. But it’s not clear exactly how the open enrollment period will work – or what would happen if families wanted to sign up their kids outside the open enrollment period.
An administration official said the department is trying to protect children but also wants to insure that carriers don’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 one pound, eight ounces, and has required intensive medical treatment. In May, Ms. 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 her and their two children to his coverage, so she applied for a family policy in the individual market. The insurer accepted her and her six-year-old daughter, but rejected her premature son, saying he didn’t reach height and weight requirements.
So "we pay everything out of pocket," she says, including equipment such as an apnea monitor; a device to measure 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, Ms. 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. But given the new requirement that insurers cover sick children, she wonders whether she should try to could get a better deal on the individual market.