Insurance Industry Still Wants To Cancel Sick People's Coverage

As the federal government debates health care reform, the health insurance industry has some news for us. They’re not going to stop canceling people’s policies after they get sick. Nope. No way.

Rescission, or cancellation of a health insurance policy after coverage is in place, can happen when insured people give incorrect or incomplete information when applying for insurance. This can be outright fraud, or something as simple as a woman forgetting to mention taking acne medication in the past when she’s diagnosed with breast cancer. Companies are happy to collect premiums until their customers get sick—then they investigate, and cancel the policy if they can.

In testimony to Congress today, CEOs of major health insurance companies admitted that their companies will not limit rescission to cases of clear fraud.

“When times are good, the insurance company is happy to sign you up and take your money in the form of premiums,” said Rep. Bart Stupak (D-Mich.). “But when times are bad . . . some insurance companies use a technicality to justify breaking its promise, at a time when most patients are too weak to fight back.”

“I think a company does have a right to make sure there’s no fraudulent information,” said Rep. Joe Barton (R-Tex.). “But if a citizen acts in good faith, we should expect the insurance company that takes their money to act in good faith also.”

Late in the hearing, Stupak, the committee chairman, put the executives on the spot. Stupak asked each of them whether he would at least commit his company to immediately stop rescissions except where they could show “intentional fraud.”

The answer from all three executives:

“No.”

It’s sort of the GM private jets moment of the health care debate, isn’t it? Only the stakes are much higher.

Health insurers refuse to limit rescission of coverage [LA Times] (Thanks, /jc!)

(Photo: pavel)