Research

The health care reform last year was designed to benefit children and families immediately by banning insurance companies from denying coverage to children with pre-existing conditions and requiring insurance companies to allow parents to keep their children on their plan until they turn 26. However, insurance companies are finding ways to get around the intention of the law.

The requirement that children under 19 be granted insurance regardless of preexisting conditions has caused Blue Cross and Blue Shield of Florida and many other insurers to stop offering child-only coverage.

Insurers fear they will lose money because parents might sign up for coverage only when their children become sick. That is scheduled to change in 2014, when the law requires that virtually everyone have health insurance.

On the other hand, there is little challenge to requiring employers to insure employees’ children up until the age of 26. They believe cost increases will be minimal.

Insurance companies believe that families have an incentive to not have their children covered until they become sick. Blue Cross Blue Shield of Florida still covers all children when families sign up for policies, but has stopped offering the individual child policies. Their Vice President of Regulatory Affairs said she has heard that insurers in 29 states have stopped offering kids-only policies.

“Some people believe that insurers make money by avoiding sick people,” said Alan Sager, a healthcare policy expert at Boston University. But he said he also understands insurers’ fear of accepting all children before the 2014 mandate requires almost everyone to get insurance. Tackling a single piece of reform “in isolation” can be difficult, he acknowledged.

This all shows that the road towards universal coverage for children will be a long one. Even regulations requiring insurance companies to cover children with pre-existing conditions does not mean they will until the federal government closes all loopholes that would allow them to do this. On the positive side, we are happy to see that extending coverage to those between 18 and 26 on their parents’ plan is noncontroversial and being implemented across the country.

Our friends at the Center of Budget and Policy Priorities flagged this important new report from the Congressional Budget Office on the budget and economic outlook. It suggests three important points to those considering drastic cuts to the portion of the budget that funds children’s and other federal programs:

• The economic recovery remains anemic, with the unemployment rate expected to remain above 8 percent through 2012. Implementing big cuts in federal spending now would weaken the economy and further slow the already sluggish pace of economic growth, sacrificing many jobs.
• Policymakers could significantly reduce the real risk that rising deficits and debt will pose later this decade simply by following current law and allowing the 2001 and 2003 tax cuts to expire at the end of 2012, as scheduled.
• While CBO’s projection of the 2011 deficit is higher than its projection last August, this change does not reflect “runaway spending.” The $445 billion cost in 2011 of December’s bipartisan tax cut-unemployment insurance deal and small business legislation enacted in September account for more than the entire $414 billion increase in CBO’s 2011 deficit projection. These two bills consisted overwhelmingly of tax cuts; spending provisions account for only $37 billion (9 percent) of their cost.

CBO forecasts that the economy will grow at about 3 percent this year and next, much slower than in previous recoveries and less than is needed to bring unemployment down quickly. CBO believes unemployment will remain above 9 percent through the end of this year and not fall close to its “natural rate” of 5.2 percent until 2016.

While everyone wishes the pace of the recovery would pick up, calls to “boost the economy by slashing federal spending immediately” are entirely at odds with mainstream economic thinking and basic economic theory.

CBO Director Doug Elmendorf says that while substantial restraint in the growth of spending, significant increases in revenues, or both will be necessary to prevent unsustainable increases in debt:

Congress may wish to implement them gradually so as to avoid a sudden negative impact on the economy, particularly as it recovers from the severe recession, and so as to give families, businesses, and state and local governments time to plan and adjust.

It will take significant changes in current policies on both the revenue and spending sides of the budget to put the budget on a sustainable path. Cutting health, education, and safety programs for children will not accomplish this and will make America less competitive going forward.

Via the Washington Post’s Ezra Klein:

American schools are more segregated by race and class today than they were on the day Martin Luther King, Jr. was killed, 43 years ago. The average white child in America attends a school that is 77 percent white, and where just 32 percent of the student body lives in poverty. The average black child attends a school that is 59 percent poor but only 29 percent white. The typical Latino kid is similarly segregated; his school is 57 percent poor and 27 percent white.

Overall, a third of all black and Latino children sit every day in classrooms that are 90 to 100 percent black and Latino.