Kathleen Sebelius, Secretary of Health and Human Services, has warned insurance companies to stop hunting for loopholes as a way to get around complying with healthcare reform.  Additionally, Sebelius intends to write regulations to assure that all insurers cover children with pre-existing conditions, even though some companies are adamant that this is not one of the new law’s requirements.

“The American people debated and discussed health insurance reform for more than a year.  Congress and the President have acted.  Now is not the time to search for non-existent loopholes that preserve a broken system,” Sebelius wrote in a letter to insurance industry lobbyist Karen Ignagni.

President Obama stressed the ban on denying children with pre-existing conditions as a focus of his argument during the reform fight.  His position is that children should be protected almost immediately after the bill becomes law – in this case, next September.  The insurance companies claim they don’t have to cover children with pre-existing conditions until 2014.

The insurers’ revolt over this presumed loophole could mean that progressive Democrats will reconsider adding a robust public option to the law.  The insurance companies’ threat to turn down sick kids makes the case to include a public option significantly more credible.