WASHINGTON — Health insurance cuts a dividing line right through the Thompson family.
Parents Mary and Joe have coverage, as does older daughter Sarah. But siblings Andrew and Emily have been turned down due to medical conditions even though both lead fairly normal and active lives in Overland Park, a Kansas City suburb.
Starting later this year, President Obama's health care law requires insurers to accept all children regardless of medical history. But the law doesn't limit what the companies can charge, and the Thompsons fear that could leave them in the same predicament: still no insurance for two children because it costs too much.
"If that's the way it's going to shake out, it's not really that helpful," Mary Thompson said.
She checked with her insurer recently and was told Andrew probably would have to have his own policy. "I could be looking at a $500-a-month policy for just the two of them," she said.
The Thompsons buy their own health insurance. Joe is a self-employed home remodeling contractor, and Mary helps with the business.
Forbidding denials and exclusions because of medical conditions is one of the major reforms of the new law. The problem mainly affects people who buy coverage directly, and workers in small businesses. Most big employer plans cover people with health problems, usually after a waiting period.
Nearly 20,500 children were denied coverage because of medical conditions in 2008, the latest year for which statistics are available. More than 18,300 were issued policies that exclude a particular condition, often at a higher premium.
For decades, insurers have used such practices to protect against risk, mindful of the bottom line but also helping to restrain premiums for healthier families. The downside is that people in need of medical care get locked out of the system. That can be particularly damaging for children who don't get needed treatment. They can be relegated to less productive lives as adults, or dependence on society.
"This is where we keep making a terrible mistake," said Judith Palfrey, president of the American Academy of Pediatrics. "This is the age group where we can get the full benefit of prevention."
Confusion about law
The ban on turning kids down goes into place this fall, a stepping stone to a full prohibition that will protect Americans of all ages in 2014, when new competitive insurance markets go into operation. At that point, insurers also will be barred from charging higher premiums to people in poor health.
But from the day the law passed, there's been confusion over the children's benefit that takes effect this year. Health and Human Services Secretary Kathleen Sebelius had to intervene with the industry to clarify that the law forbids denial of coverage, not just exclusion of particular conditions.
What insurers can charge is an open question.
"There is nothing in the law that limits what insurers can charge," said DeAnn Friedholm, health reform coordinator for Consumers Union.
That could be a problem for parents whose children have serious medical conditions. "It certainly frustrates the intent" of the law, said Jon Gabel, a senior fellow with the National Opinion Research Center, a social policy think tank.
In an interview, Sebelius promised "robust and rigorous oversight" of how insurance companies deal with the coverage requirement. "This is a huge piece of health security for a number of those parents and families," she said.
A spokesman for Humana, which insures three of the Thompsons, said his company will hold off on pricing decisions until the government issues rules.
"We are awaiting guidance from the government as to how to implement this aspect of the new law," said Tom Noland. "Our pricing ... will conform to that guidance." Other major insurers are also in wait-and-see mode. Noland declined to discuss the Thompson case.
Reasons for denial
The Thompsons have struggled to afford health insurance. They're now paying a little over $500 a month for a policy that leaves them with considerable out-of-pocket costs and doesn't cover two out of five family members.
Mary Thompson said they could afford another $100 a month, but anything above that would be a stretch. The couple adopted their three children.
Middle son Andrew was turned down for coverage because he's been diagnosed with attention deficit hyperactivity disorder, a common condition in children and adolescents that's usually managed with medication.
Andrew has been able to avoid the need for prescriptions, but his mother is concerned he might think the situation adds to the family's burdens. "He's definitely aware that he's not insured," she said.
The other uninsured child, youngest daughter Emily, has spina bifida, a birth defect that leaves part of the spinal cord exposed. Emily had surgery as an infant to correct the problem, but must be careful to avoid complications. She likes to ride her bike, play outdoors, and in fifth-grade reads at a high school level.
Recently, Emily was diagnosed with an autism-related disorder that is on the mild end of the spectrum but can lead to behavioral problems. That makes the quest for insurance even harder.
The Thompsons have lined up low-cost follow-up care for Emily's spina bifida from a children's hospital, and they also get help from a mental health center. But the unexpected expenses — unavoidable with children — can pile up. "Every time we go somewhere else, I have to stop and ask them if they have a financial assistance program," Mary said. "It slows you down."
Insurers have several options for how to set premiums for children such as Andrew and Emily. They can spread the cost broadly across their customers, modestly raising premiums for everyone. Or they can ask families like the Thompsons to bear the brunt.
"That's what scares me," said the kids' mother.