Healthcare reform will keep newborns with heart defects from insurance rejection

Soon after President Barack Obama signed health reform, a local baby with a heart condition was rejected for insurance. The story became front-page news in Fort Worth and was picked up nationally.

The insurer quickly reversed its decision and agreed to pay for a procedure the newborn had received days earlier.

"I feel like Blue Cross Blue Shield finally realized they made a mistake," Doug Tracy, the child's father, told the Star-Telegram.

Maybe it was a mistake from a public relations perspective. Or maybe the company simply decided that it could afford to help out. But there was no mistake about the law or the company's responsibilities.

Blue Cross Blue Shield had no more duty to cover the hospital costs than anyone else -- other insurers, government agencies or charities. It could have said that Doug Tracy made a mistake -- that he should have insured himself and his wife -- and that he should pay the consequences.

Of course, that's too heartless to say publicly.

The Tracy case has a happy ending, unlike many in which medical care is denied or delayed and families are ruined financially. But the episode stands as another exhibit of what's wrong with health insurance in America, and how it's about to get better.

In six months, the same sequence of events won't happen, because insurers won't be allowed to reject children for a pre-existing condition, even a heart defect. In four years, such exclusions may be rare, period, because every citizen will be required to have health insurance, even self-employed people like Tracy.

This is the beginning of the end of an era. Soon, everyone who wants health insurance will be able to get it, and they'll be expected to buy in. Standard procedures will be covered. And most people won't have to fear that they'll be on the hook for huge medical costs.

Tracy's case is unusual, because the parents have insurance for their two older children but not for themselves. They planned to do the same for the baby, but the heart problem ended that.

If the parents had had insurance, their coverage would have automatically been extended to the baby. But there's no similar guarantee for siblings.

Insurance law has reasons for this wrinkle, but are parents expected to know such fine points -- and understand the risks? Are they expected to make a cold financial calculation that weighs the costs of covering one parent vs. two children? Should they just take a class on insurance contracts?

"It's hard to understand all the fine print in a health plan and know whether you're really vulnerable," says Stacey Pogue, senior policy analyst at the Center for Public Policy Priorities, an advocacy group in Austin. "People are shocked every day when they find out what their plans don't cover.

"Health reform doesn't fix everything," she says, citing higher fees for out-of-network providers. "But most of the loopholes and fine print go away."

Families that can't afford insurance will be eligible for federal assistance, and more of the poor will be covered through Medicaid, especially in Texas. In four years, everyone in the individual market will be able to shop in insurance exchanges, which are intended to offer more competitive plans.

Federal subsidies are the flip side of mandates that require coverage, and they work in concert with the new rules that bar insurers from denying applicants for pre-existing conditions. The intent is to bring these pieces together so that the Tracys and similar families can get the coverage they want and need.

Better access to better coverage should reduce the financial hardship from healthcare costs. In 1981, serious medical problems were related to 8 percent of all personal bankruptcies. By 2005, they accounted for half the filings. By 2007, 62 percent of all bankruptcies had a medical cause, according to a study led by David Himmelstein.

And get this: Three-quarters of those filers had health insurance.

"How did medical problems propel so many middle-class, insured Americans toward bankruptcy?" asks the 2009 study in The American Journal of Medicine. "Many families with continuous coverage found themselves under-insured, responsible for thousands of dollars in out-of-pocket costs. Others had private coverage but lost it when they became too sick to work."

Some observers, especially in the insurance industry, believe that people will try to play the system. They say the fines for not buying coverage, $695 a year or a percentage of income, aren't steep enough to force a purchase.

"No one, save one cursed by a guilty conscience or bad math, will want to buy health insurance until they are at the hospital's doors," says Blake Woodard, a partner at Woodard Insurance in Fort Worth.

He says that many won't take on the personal responsibility of buying insurance but complain about insurers and the system. "I know that people don't buy health insurance because it's the right thing to do," Woodard says.

But in Massachusetts, where health reform has been under way for a couple of years, almost 98 percent of the public has signed on, says Michael Miller, director of strategic health policy for Community Catalyst, a healthcare advocacy group.

The costs are lower and the benefits better than the federal program. But the idea of shared responsibility is a cornerstone of both programs.

"It's not free," Miller says. "But overall, people are willing to participate in the system."

Like Doug Tracy, most parents want health insurance -- for their children and themselves. Soon they won't need a newspaper story to get it.

Mitchell Schnurman's column appears Sundays and Wednesdays. 817-390-7821