I wrote about the insurance industry’s attempt to delay the piece of the Affordable Care Act providing guaranteed issue for children back on Thursday. The NYT hits this again today, describing how the industry considers it an issue of semantics and drafting:

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.

William G. Schiffbauer, a lawyer whose clients include employers and insurance companies, said: “The fine print differs from the larger political message. If a company sells insurance, it will have to cover pre-existing conditions for children covered by the policy. But it does not have to sell to somebody with a pre-existing condition. And the insurer could increase premiums to cover the additional cost.”

The key is that last sentence. Guaranteed issue doesn’t mean a whole lot on its own without accompaniment with some form of community rating. Otherwise, the insurer can increase premiums to such a degree for the particular family that they wouldn’t be able to afford insurance without keeping the child off the policy.

Top Democrats may be outraged by the insurance industry’s intransigence, but nowhere in the law – to my knowledge – did they add any community rating language to cover this initial guaranteed issue for children. There is modified community rating for all along with guaranteed issue when the exchanges start up in 2014.

Insurers want to do one of two things – exclude coverage for the particular pre-existing ailment of the child, or just exclude the child from coverage at all. Since children don’t buy their own policies, this gets mixed up with family coverage. And of course, if a child and a parent both have a pre-existing condition, that family will not be able to get coverage until 2014.

When members of the group tasked with writing the rules say something like this, you know something is wrong:

Experts at the National Association of Insurance Commissioners share that concern.

“I would like to see the kids covered,” said Sandy Praeger, the insurance commissioner of Kansas. “But without guaranteed issue of insurance, I am not sure companies will be required to take children under 19.”

The guaranteed issue for children provision came into the Affordable Care Act late in the game, and does not seem to have been well thought-out.

David Dayen

David Dayen