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Does the Affordable Care Act end health discrimination for kids before 2014?

A lot of folks have asked why the Affordable Care Act only eliminates preexisting condition discrimination in 2014. The basic answer is that in order to avoid an insurance death spiral, where costs rise because sick people rush into the system and healthy people rush out, you need to pair the end of health discrimination with a couple of other policies: The major pieces are guaranteed issue, so insurers also have to sell insurance to everyone; an individual mandate, so the risk pool includes both the healthy and the sick; and subsidies, so it's affordable for people to buy insurance.

But one of the bill's immediate benefits was that it ended health discrimination for children. I figured it could do that quickly because children aren't very expensive to insure, and most of the kids who would be affected -- that is to say, kids who aren't covered by insurance their parents get from employers -- are eligible for S-CHIP. That may still be true, but it also appears that there was less to this policy than met the eye: It gets rid of health discrimination, but it doesn't impose guaranteed issue. That is to say, an insurer can't charge high prices to a kid with a congenital heart defect, but the insurer can deny the kid coverage altogether. At least until 2014.

It looks like the Obama administration will issue some regulations saying that their view is that the language involves both access to insurance and the benefits kids get when they're insured, but it's not clear whether that'll matter (some experts think it will, but I'm skeptical, particularly if insurers want to evade it). Another option would be to pass another bill strengthening the benefit, though Republicans might filibuster that. The likeliest outcome, I think, is that this early deliverable -- like most of the early deliverables -- isn't worth much, and the bill really goes into effect in 2014.

By Ezra Klein  |  March 29, 2010; 4:03 PM ET
Categories:  Health Reform  
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Comments

"Another option would be to pass another bill strengthening the benefit, though Republicans might filibuster that."

That's a winner for the Obama administration and the Democrats, either way. Republicans might try to run on Democrats voting to give Vagria to criminals and sex offenders, but Democrats could run on Republicans voting to specifically deny insurance coverage for children. Either some Republicans have to bite the bullet and join, and we get the law, or none of them do and they are the party that wants children to get sick and die.

The Democrats would be crazy not to be already drafting that legislation.

Posted by: Kevin_Willis | March 29, 2010 3:27 PM | Report abuse

"The likeliest outcome, I think, is that this early deliverable -- like most of the early deliverables -- isn't worth much, and the bill really goes into effect in 2014."

No, the likeliest outcome is that children will die unnecessarily because of lack of insurance to affordable health insurance.

Trying to whitewash likely outcomes like this is like New Orleanians saying that the likely outcome of the next Hurricane Katrina before all the levees get fixed is that some houses will get wet. Duh. And people will die.

When Congress does a poor and inadequate job of writing legislation people continue to die needlessly. That is the true death panel: Congress's inability to respond quickly and effectively to a national crisis other than imagined ones like "weapons of mass destruction."

Posted by: jc263field | March 29, 2010 3:41 PM | Report abuse

I agree, if the Republicans want to filibuster health care for children, let 'em and see what happens. This would be a perfect example of the costs of blanket obstructionism by Repubs.

Posted by: jsrice | March 29, 2010 3:42 PM | Report abuse

How would you write a bill that mandated guaranteed issue- but only for this situation?

Posted by: spotatl | March 29, 2010 3:44 PM | Report abuse

Agreeing with all the comments: if the Republicans would like to filibuster a remedial bill that guarantees coverage for children with congenital heart defects or leukemia, I say go for it. Sounds like a third-rail to me, but I've been surprised before.

Posted by: JJenkins2 | March 29, 2010 3:54 PM | Report abuse

Still think it's not necessary to actually read the bill, Ezra?

Posted by: tomtildrum | March 29, 2010 4:05 PM | Report abuse

To Peter Orzag, Christina Romer and Paul Krugman:

I thought the benefits kicked in immediately?

Thanks, Ezra for making the point for opponents of this bill: "The likeliest outcome, I think, is that this early deliverable -- like most of the early deliverables -- isn't worth much, and the bill really goes into effect in 2014."

Posted by: ChrisDC3 | March 29, 2010 4:05 PM | Report abuse

For some reason I think chicken pluckers would have missed this too. See nj reform circa 1994. Insurers couldn't deny originally but could price up due to health conditions. The other option would be requiring children to be covered or their parents would be penalized with subsidies.childrens mandate Blah blah blah

Posted by: visionbrkr | March 29, 2010 4:17 PM | Report abuse

It would have been nice if you read the bill instead of lying about it for the last year.

Posted by: obrier2 | March 29, 2010 4:19 PM | Report abuse

So, Stupak 11 asked for $3.4 billion in earmarks, after they voted for the president's bill.
More bribery....

Posted by: ohioan | March 29, 2010 4:22 PM | Report abuse

ezra


Is It me or were you saying just after reform passed that this was one of the biggest selling points come November. I'm guessing you're now changing that thought?

Posted by: visionbrkr | March 29, 2010 4:30 PM | Report abuse

I agree that Republicans would be suicidal to filibuster a legislative fix, but that mud flies both ways - how much fun will Republicans have after Reid at al admit that Obama has been blowing smoke and misrepresenting the bill for three months?

Hence the current pretense that a regulatory fix will suffice (it won't.)

Posted by: tom_maguire | March 29, 2010 4:31 PM | Report abuse

All the people saying they should write the law and make Republicans vote against providing care to children: so you think the insurers should be forced to have guaranteed issue even before there is a mandate to buy coverage?

Take off your "insurers are evil" blinders for a moment and think about what you're suggesting.

Posted by: ab13 | March 29, 2010 4:46 PM | Report abuse

Obama should use some of his new found stature to issue an executive order requiring insurance companies to issue policies to children. He should DARE anybody to defy the order or take the government to court.

It's not a risk free strategy. They'll get some blow back from reform opponents who will accuse the Democrats of incompetence for (either deliberately or not, one suspects the former) missing this detail.

But Obama can quite justifiably in my view simply state that, in a necessarily long and complex piece of legislation (unlike the simplistic and weak "solutions" the GOP was offering), some tweaking was BOUND to be required.

Posted by: Jasper999 | March 29, 2010 4:47 PM | Report abuse

****so you think the insurers should be forced to have guaranteed issue even before there is a mandate to buy coverage? *****

Yes. I do. Call me a sentimental bleeding heart if you want, but when it comes to children, I say we err on the side of their health and not that of industry profits. And remember, there's nothing in the law that prohibits insurance companies from raising premiums on their customer base AS A WHOLE to make up for this difference (right?).

Posted by: Jasper999 | March 29, 2010 4:51 PM | Report abuse

@Jasper999: "Obama should use some of his new found stature to issue an executive order requiring insurance companies to issue policies to children."

You're right. While he's at it, he should issue an order that a life insurer must sell you life insurance when you have terminal cancer as long as you have children. And property insurers have to sell you homeowners insurance when your house is on fire as long as some kids live in the house. Kids are so cute and cuddly, who cares if creates a death spiral?

Posted by: ab13 | March 29, 2010 4:52 PM | Report abuse

------"Yes. I do. Call me a sentimental bleeding heart if you want, but when it comes to children, I say we err on the side of their health and not that of industry profits."

It has nothing to do with profits, it has to do with staying solvent. A death spiral doesn't ultimately result in losing profits, a death spiral results in an insurer going out of business.

You can't have guaranteed issue without a mandate, and no amount of nonsensical "won't somebody think about the children" whining changes that fact.

-----"And remember, there's nothing in the law that prohibits insurance companies from raising premiums on their customer base AS A WHOLE to make up for this difference (right?)."

I think maybe you don't understand the concept of a death spiral.

Posted by: ab13 | March 29, 2010 4:56 PM | Report abuse

Ezra, you're getting your insurance definitions mixed up. You're confusing the term community rating with guaranteed issue. I write this as a life insurance actuary.

Guaranteed issue underwriting means that you don't have to show proof of insurability to get health insurance. The insurer is required to accept you. [Simplified issue underwriting involves asking one or two questions, and full underwriting means insurers do the blood tests to see if you smoke, the urine tests for diabetes, etc.] Even Paul Ryan's proposal has guaranteed issue underwriting.

Community rating means one rate for everyone -- regardless of age, sex, health status, occupation, etc. No standard, substandard, preferred, super-preferred, gender, occupation, etc. ratings are allowed under a community rating. This law has a community rating modified by age (by a limited amount), smoking status (by a limited amount), geographic region (determined by HHS), and family structure. This quasi-community rating doesn't go into effect until 2014. [Paul Ryan's bill lacks a community rating, and permits standard, substandard, etc. ratings.]

The way I read the immediate provisions of the bill -- neither guaranteed issue and certainly not a community rating -- go into effect until 2014. The only thing insurers are prohibited from doing is writing pre-existing clauses on insurance policies. Which doesn't amount to much as insurers can still charge the diabetic child based on their individual risk.

Posted by: moronjim | March 29, 2010 4:57 PM | Report abuse

Why doesn't the gov. just pay for it out of the general fund if it's so important?

Posted by: Holla26 | March 29, 2010 4:57 PM | Report abuse

moronjim, actually starting right away they cannot discriminate against kids for pre-ex, i.e. they can't charge more for the diabetic child or refuse to cover his diabetes-related claims. But they can just refuse to issue the policy at all. The Dems didn't realize that they left that loophole when they were claiming that the bill would stop all of the pre-ex discrimination against kids, and now it's law so they can't change without 60 votes.

Posted by: ab13 | March 29, 2010 5:04 PM | Report abuse

ab13: Lame response on your part. We didn't just enact landmark legislation dealing with life insurance or property/casualty insurance.

Also, I think the fears of a death spiral are overblown, given the fact that children tend to be cheap to insure. The relatively small number of sick, currently uninsured children can't be that massive, and won't, I believe, exert much upward pressure on premiums.

Posted by: Jasper999 | March 29, 2010 5:05 PM | Report abuse

****I think maybe you don't understand the concept of a death spiral.*****

No. I understand it. I simply typed without thinking. Hence my 5:05pm comment.

Posted by: Jasper999 | March 29, 2010 5:08 PM | Report abuse

"Lame response on your part. We didn't just enact landmark legislation dealing with life insurance or property/casualty insurance."

Way to completely miss the point.

Yes, you just enacted landmark legislation, and according to that landmark legislation there is no guaranteed issue until 2014. If you want guaranteed issue before 2014, you're going to need a new law, and a new vote from the House and Senate.

------"The relatively small number of sick, currently uninsured children can't be that massive, and won't, I believe, exert much upward pressure on premiums."

So we should try to retroactively change a law because "OMG the kids are going to die! Somebody think about the children!", but it's a small number that won't cost that much to insure. You need to decide which point of view you hold.

-----"Also, I think the fears of a death spiral are overblown, given the fact that children tend to be cheap to insure."

Yes, kids are cheap to insure when you don't create a market that is ripe for anti-selection. You're making the faulty assumption that you can hold everything else constant.

Posted by: ab13 | March 29, 2010 5:13 PM | Report abuse

*****Yes, you just enacted landmark legislation, and according to that landmark legislation there is no guaranteed issue until 2014******

Right. Hence my suggestion for Obama to issue an executive order. Maybe it wouldn't work, but I have a hard time imagining somebody taking the White House to court in order to preserve the right not to insure kids with HIV or Leukemia.

*****So we should try to retroactively change a law because "OMG the kids are going to die!******

Again, yes.

*****You're making the faulty assumption that you can hold everything else constant.*****

No I'm not. I'm making the back-of-the-envelope calculation that the vast majority of children with major medical issues are already covered by group plans, or by Medicaid, or by SCHIP, and that the remaining number isn't so large as to make a major impact on premiums. I'm not contending there would zero impact. And maybe the impact would be larger than I think. I would simply prefer to see something done soon, if there's a politically feasible way of taking action, than making sick children wait until 2014.

Posted by: Jasper999 | March 29, 2010 5:53 PM | Report abuse


Jasper999

Please clarify for me your experience that qualifies you to say that "the death spiral is overblown" and chuldrens claims "can't be that massive"

I'm sure you have some great links

Posted by: visionbrkr | March 29, 2010 6:18 PM | Report abuse


Jasper999

Please clarify for me your experience that qualifies you to say that "the death spiral is overblown" and chuldrens claims "can't be that massive"

I'm sure you have some great links

Posted by: visionbrkr | March 29, 2010 6:18 PM | Report abuse

*****Please clarify for me your experience that qualifies you to say that "the death spiral is overblown" and chuldrens claims "can't be that massive"*****

As I clearly indicated @ 5:53pm, I'm simply making back of the envelope calculations. If you think the impact will be that disastrous ("death spiral" indeed), then feel free to sound the alarm with your own, painstakingly-researched numbers.

Anyway, it's all rather irrelevant, because, as Ezra's latest post indicates, the people who actually hold political power -- the White House and the Secretary of HHS -- see things as I do: no executive order or congressional action required.

Deal with it.

Posted by: Jasper999 | March 29, 2010 6:52 PM | Report abuse


I'm thinking you've heard of the case of anthem in California, right? If that's not evidence enough how about nj and NY that have no mandate and death spirals. Again other than your clearly uneducated guesses where do you get off with having such strong opinions but clearly no relevant training on the subject?

Posted by: visionbrkr | March 29, 2010 7:37 PM | Report abuse

"Right. Hence my suggestion for Obama to issue an executive order."

Do you think the President has, or ought to have, the power to unilaterally dictate rules to the industry of his choosing? What do you even mean "issue an executive order"? The President can just say, "Aetna will sell insurance to people with pre-existing conditions even though no law requires them to", or "Dell will now sell computers for $100 each"? How much power do you think the President ought to have? They wrote the law, and they screwed up. Dealing with that screw-up is the Democrats problem, and the President can't do anything about it.

Posted by: ab13 | March 29, 2010 9:49 PM | Report abuse

------"I'm making the back-of-the-envelope calculation that the vast majority of children with major medical issues are already covered by group plans, or by Medicaid, or by SCHIP, and that the remaining number isn't so large as to make a major impact on premiums."

Please share those "calculations" you've done with us. I eagerly await seeing your back of the envelope work that allows you to make such a proclamation.

Posted by: ab13 | March 29, 2010 9:50 PM | Report abuse

-----"Anyway, it's all rather irrelevant, because, as Ezra's latest post indicates, the people who actually hold political power -- the White House and the Secretary of HHS -- see things as I do: no executive order or congressional action required."

Well, they think no action is required because they think they can bully the insurers into doing something the law doesn't require them to do.

Posted by: ab13 | March 29, 2010 9:57 PM | Report abuse

You're calling risk pricing "health discrimination" now? Go get a job as an actuary for a year and then look at this issue again.

Posted by: staticvars | March 29, 2010 11:29 PM | Report abuse

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