Contact: Erin Humiston, 972-874-5139, The Institute for Policy Innovation (IPI), erin@ipi.org

 

WASHINGTON, March 28, 2011 /Standard Newswire/-- IPI resident scholar Dr. Merrill Matthews (photo) writes today in Forbes.com that although HHS Secretary Kathleen Sebelius claims those in opposition to the president's signature legislation have been delivering much "misinformation" about it, it's actually the law's biggest defenders who seem to be confused.

 

Dr. Merrill Matthews Jr. writes:

 

Health and Human Services Secretary Kathleen Sebelius appeared on National Public Radio's Diane Rehm Show last week as part of a concerted effort to promote the one-year anniversary of President Obama's health care legislation. She claimed that the opposition has been delivering "lots of misinformation" about the legislation. Below I provide some quotes from her appearance, along with a summary of the law. I'll let you decide who is disseminating the misinformation.

 

Sebelius used the example of a hypothetical female small business owner with a child. The young mother "and her employees can be medically underwritten, so a company can say we're not going to cover your employee with a heart attack," and then claims, "there are not many laws around the small group market."

 

In fact, states have been heavily involved in regulating small group health insurance for decades. The primary federal law is the Health Insurance Portability and Accountability Act (HIPAA), sponsored by Sebelius' fellow Kansan, former Republican Senator Nancy Kassebaum, and passed in 1996 by a Republican-led House and Senate.

 

Under HIPAA, insurers selling in a state's small group market MUST accept all employees in the group. They cannot reject one employee, as the secretary asserts, because of a heart attack or any other medical condition. The Illinois Department of Insurance nicely summarizes HIPAA requirements in one of its "Insurance Facts" publication: "An insurer cannot refuse to sell to small employers (if the insurer sells small group coverage) and must cover all employees and dependents, regardless of health conditions, who are eligible under a small employer's plan."

 

That's federal law. Since Sebelius was the Kansas insurance commissioner when HIPAA passed, you'd think she would know that.

 

Insurers are allowed, as she asserts, to underwrite employees in most states, which means they can look at the age, gender and health history of individuals; but the premium charged reflects the health history of the whole group. But even that ability is usually restricted by state-legislated "rating bands" that limit the spread between a standard premium and the highest one an insurer can charge.

 

Sebelius continues: "She also is a woman. So women in the insurance market could be given extraordinarily higher rates because they might get pregnant at some point in their lives, or the insurance company would just refuse to cover anyone who was a woman because of a potential pregnancy."

 

This statement is stunningly wrong. Federal law absolutely prohibits excluding employees within a group, including for being female. And if any health insurer refused to cover all the women in a group because one might become pregnant, the state insurance commissioner would run the insurer out of town on a rail. Again turning to the Illinois DOI, "Pregnancy cannot be denied as a preexisting condition by an employer's insurer."

 

Sebelius then goes on to say the business owner's hypothetical child was born with a heart defect, but the problem was fixed and the child is now five years old and healthy. "That's a so-called pre-existing health condition. That child for the rest of his or her life under the old regime ... could be discriminated against by insurance companies at every step along the way. Insurance companies could deny coverage to that child. When her son became an adult they could say we don't want you ever in an insurance pool, or we're going to charge you three or four times as much as anybody else. That's now illegal in this country thanks to the Affordable Care Act.

 

But as the Illinois DOI points out, "[P]reexisting conditions cannot be applied to newborns, adopted children under age 18 or a child under age 18 placed for adoption as long as the child becomes covered under the health plan within 30 days of birth, adoption or placement for adoption" (if done within 63 days).

 

If that business owner has what's known as "HIPAA-qualified" coverage, meaning the coverage meets the requirements of the HIPAA legislation--and the large majority of employer-provided group coverage does--the child would have health insurance options for the rest of his life.

 

If the mother closed her business and went to work for a company with health coverage, that new company's insurance would have to accept the child with no restrictions or waiting periods. Indeed, I know a family whose newborn daughter had a defective heart and had to have a heart transplant. While she is doing fine some six months post-op, she has a major pre-existing condition.

 

The father recently changed jobs, moving from one company's small group policy to another. It wasn't ObamaCare that required the new company to accept the whole family--father, mother of childbearing age, and child--with no coverage gaps. It was the 15-year-old HIPAA legislation. If that father maintains HIPAA-qualified coverage, there are health insurance options available to the family, even if the father decides to become self-employed.

 

To be sure, having that type of pre-existing condition creates coverage problems--problems the HIPAA legislation tried to reduce. Meeting the requirements, for the family now and when the child becomes an adult later, wouldn't be easy under the old system. HIPAA also has a number of caveats, so creating a more seamless system would be very helpful. But we don't know yet if ObamaCare achieves that--and won't know until 2014 or later.

 

Of course, some of the problems Sebelius discusses are true of the individual market, where people buy their own health policies, but not the group market--and the secretary was referring to the group market.

 

Sebelius' comments--and many more that I don't have space to address--help explain why so many people are confused about the law. The law's biggest defenders remain confused themselves. There is misinformation being delivered, and most is coming from the White House.

 

To read the piece online, please visit Forbes.com.

 

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