David R. Henderson  

Congress Messes Up

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One of the reasons to have hearings on legislation is so people who comb through it can point out hidden traps, ambiguous language, unintended consequences, etc. But large parts of the Senate bill on health care that went into law were written behind closed doors. And it shows.

Throughout the discussion about the bill, various proponents said that the law would immediately prevent insurance companies from denying coverage to children based on pre-existing conditions. And it does. What, apparently, it doesn't do is require insurance companies to cover children. At least that's what some insurance companies are reputed to be saying. Having heard this, Obama appointee Kathleen Sebelius wrote a threatening letter to the health insurance companies' trade association.

Interestingly, various Democratic Congressmen expressed outrage at the insurance companies for reading the law carefully and trying to figure out what they are and are not required to do. There's no report that the Congressmen are angry at themselves for their carelessness.

Even more interesting, three of the leading Democratic Congressmen who voted for the bill, Henry Waxman, Sander Levin, and George Miller, seem to be aware that maybe the insurance companies are right. On March 24, they wrote:

Under the legislation that Congress passed and the President signed yesterday, plans that include coverage of children cannot deny coverage to a child based upon a pre-existing condition. We have been assured by the Department of Health and Human Services that any possible ambiguity in the bill can be addressed by the Secretary with regulation.
Notice the first sentence. "[P]lans that include coverage of children cannot deny coverage to a child based upon a pre-existing condition." Duh. That's not at issue. The issue is whether the company is required to offer coverage to children. And the second sentence admits that there may be ambiguity.

Karen Ignagni, the head of the health insurance trade association, has caved and said that the companies will go along with what Sebelius wants. But so what? She doesn't make decisions for the individual companies. A company that wants to stick to the law as written instead of the law the Congressmen say they meant to write might well have a strong legal case.


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COMMENTS (11 to date)
WIlliam Barghest writes:

Who cares if you have a sound legal case if the future of your company depends on the good graces of the government anyways.

Pat writes:

"[P]lans that include coverage of children cannot deny coverage to a child based upon a pre-existing condition."

Seems to me like that implies that plans don't have to include coverage of children. Otherwise, why make that distinction?

David R. Henderson writes:

@Pat,
Exactly.

Nick C. writes:

If insurers voluntarily go along with the intent of the legislation even though they aren't strictly required to do so, then it both enhances their public image and creates an embarrassing situation for the lawmakers. Proponents have made insurance companies out to be the bad guys, so now it's their chance to turn it around by saying that they'll still do the right thing even though the legislators fumbled. Such a distraction would make it much easier for them to exploit a more subtle loophole while nobody's looking.

I have a hard time imagining that the insurance industry will fight this particular battle--refusing to cover children won't win many sympathizers.

It's interesting that they dropped the ball on something so fundamental to one of the main selling points of the legislation--and then tried to deflect blame when they were called out on the mistake. It makes me wonder what else is wrong with the bill, and how lawmakers will respond once other loopholes become apparent.

Rod writes:

Congress Messes Up
Dog bites man
Sun rises in East
Commenter's tongue in cheek

Marcus writes:

"Seems to me like that implies that plans don't have to include coverage of children. Otherwise, why make that distinction?" -- Pat

My guess is that there are insurance plans which legitimately don't cover children. Like, perhaps, insurance plans for individuals. There are probably others.

The wording of the law apparently acknowledges that but also, as such legislation often does, creates a loophole.

SPEPost writes:

Whenever I watch Congressional hearings, I get the impression it's point is to yell and scold to create an impression of being the boss. But on the health care bill, I think we're just going to figure out how it works by the bad news or lack of bad news....

John Goodman writes:

This is like something out of Atlas Shrugged.

R Richard Schweitzer writes:

As one of those now parsing this highly fragmented legislation, I see that great issues are going to come in implementation.

There is a great deal of "Impairment of Contract,"
which is forbidden to the states, but not to Congress.

My reading of the part cited is that Insurers will not have to offer the coverage in question until 2012 possibly 2014.

However, we can expect a very extensive "Technical Amendments" Bill right after the August recess (staff needs time - but it will not be "scored" by CBO).

mulp writes:

I'm all in favor of insurers denying coverage to all children in family plans. I will welcome anything the insurers do to make the current insurance system serve fewer and fewer people, and do so as rapidly as possible.

And I'd think conservatives who want to end employer group plans would agree. Let's put most people in the rather problematic individual insurance market. My guess is that results in Medicare for all that much sooner.

And that is the reason the insurers aren't going to drop all children; they know doing so would turn tens of millions of families against them and for a simpler system.

lindsay writes:

The original bill proposed by the House was 1,990 pages long when it was introduced, and by the time the Senate finished adjusting and adding things in between sentences it was 2,074 pages (http://www.politico.com/livepulse/1109/
Senate_bill_weighs_in_at_2074_pages.html). Now I know I would not want to read over 2,000 pages of a governmental bill, but then again I am not a representative in government. I agree with Henderson’s first paragraph in that it is the duty of our government officials to pass bills that are Constitutional and implement plans that are what’s best for the people. I’m just thinking that’s a little hard to do when you don’t read the bill you’re passing. How are we supposed to have an efficient economy when our businesses don’t even know what they can do because of the ambiguity of the new laws? It’s unacceptable by all standards. Think of it this way: say you were going to give a presentation to an audience of a new idea you came up with and you had handed out pamphlets with information about it; wouldn’t it be reasonable for you to know everything there was to know about your topic and what the pamphlet that you handed out said in it? The audience is expecting you to. What if someone stands up and asks you a question about a topic mentioned in your pamphlet and you don’t know anything about it and you have no idea how to explain it? This is essentially the situation the government has gotten itself into. The insurance companies are standing up and asking questions about the ambiguity of the bill and the very people who passed it don’t know what to say. Who knows what other ambiguities will be hidden between the lines of the bills in the future. For an economy to be successful everyone (government and businesses) needs to be on the same page…no pun intended…so that resources can be appropriately allocated to achieve efficiency.

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