A state law that takes effect Saturday goes further than the federal health law when it comes to making sure children with pre-existing medical conditions can get health insurance coverage.

A provision in the federal law, which took effect Sept. 23, bars insurers from denying coverage to children who have medical problems.

But many of the largest health insurers in California and other states initially stopped issuing new child-only policies because they were concerned that parents would wait until their child got sick before getting insurance. Most of those insurers announced last week they will return to the market in California and comply with the state and federal laws.

The new state law, authored by Assemblyman Mike Feuer, D-Los Angeles, and signed into law by Gov. Arnold Schwarzenegger on Sept. 30, bars insurers that refuse to sell policies exclusively for children from the broader individual market for five years. It also limits the amount insurers can charge for covering children with serious health conditions to no more than twice what they would charge healthier children.

While it allows parents to sign up their kids for coverage year round, the new law discourages them from signing up outside specific "open enrollment" periods by allowing insurers to charge higher premiums. The enrollment periods include the first 60 days from when the law goes into effect, the child's birthday month and after certain events, such as the loss of insurance coverage.

"Insurers can no longer discriminate against the sickest children by denying them coverage or charging exorbitant premiums," said Kelly Hardy, director of health policy at Children Now, a national children's rights group based in Oakland.

Legal haze

Because there's no legal definition of a pre-existing condition, Hardy said such conditions can include anything from an ear infection to asthma or autism. She said an estimated 576,000 children in California have been diagnosed with a condition that could lead to denial of coverage.

Hardy said her group and other children's health advocates are working with the California Department of Insurance and Department of Managed Health Care to get the word out to parents about the open enrollment periods.

The insurance department last week issued guidelines that clarified various aspects of the new law, such as the fact that insurers must offer coverage to those under 19 for every individual policy the insurers sell - not just select, limited policies.

"I want to make sure that insurers completely understand their obligations under the new health reform laws, especially as they relate to health coverage for children," Steve Poizner, the state insurance commissioner, said in a statement.

Dropped coverage

When the federal provision went into effect Sept. 23, Anthem Blue Cross, Health Net, Aetna and other insurers said they would not sell new child-only policies because they feared they would get hit with huge costs if parents bought insurance only after a child got sick.

The new state law imposes a five-year blackout from the individual health market for insurers that won't sell new child policies. Anthem, Kaiser Permanente, Aetna, Health Net and UnitedHealth Group have since said they will again start issuing child-only policies Saturday.

It looks as though the state law has already had the desired effect, said Democratic Assemblyman Dave Jones, who will take over as state insurance commissioner in January.

"I'm going to be closely monitoring the actions of the insurers to ensure they're complying with this law, and I'm hopeful they will," he said.

Blue Shield of California, based in San Francisco, was one of the few insurers that continued to write child-only policies.

Tom Epstein, a Blue Shield vice president, said the state law still permits parents to apply year round - albeit risking higher rates outside the enrollment periods. "It would be more effective to have had one open enrollment period than to allow higher rates outside of that period," he said.

For parents, however, both the federal provision and the state law offer them something they didn't have before - an assurance that their child can get health insurance.

Deborah Gustlin of Morgan Hill feels as if she finally has real health insurance for her 12-year-old son, Benjamin, who has Asperger's syndrome, a form of autism.

Hiding his condition

After an insurer rejected her son for coverage several years ago, Gustlin chose not to disclose his condition on a subsequent application - a risky move considering that his coverage could have been retroactively canceled if the insurer had discovered she lied about his pre-existing condition.

But Gustlin felt desperate. "I needed insurance in case he got sick or broke his arm," said Gustlin, a self-employed mother of two who runs an art studio.

Over the past four years since he was accepted for coverage, Gustlin has paid for all treatment related to his Asperger's on her own, a cost of more than $20,000.

Since the new federal provision went into effect, Gustlin had to take her son to the hospital for a change in his Asperger's medication. For the first time, she said, her insurer covered the bill.