California To Fight Health Insurance Rescissions?
The LA Times is reporting that California Insurance Commissioner Steve Poizner will reveal new regulations aimed at stopping a controversial health insurance practice in which customers with costly illnesses are retroactively dropped.
The practice, known as "rescission," is explained in this Q&A from Frontline with Karen Pollitz, a research professor at Georgetown University who studies health care finance:
How does this work?
[It works] particularly in underwritten policies, particularly where you had to show eligibility to get into a policy. It happens most in the individual insurance market, but it can happen in group policies as well.Once you make a big claim, particularly in the first year or two of coverage, there's an incentive for the insurer to go back and investigate and see, is there any reason why you shouldn't have been in this policy in the first place? Maybe the claim is for a brain tumor, and the insurer can go back and comb through your records and realize: "Oh! Six months before you bought this policy, you complained to the doctor that you were having headaches. That's a symptom. This was pre-existing. Had I known you had a brain tumor when I sold you the policy, I wouldn't have sold you the policy, and so I'm taking it back, and I won't be paying the claim"; or, "I'll declare that this tumor was pre-existing. You can keep the policy, but I won't pay the claims related to your pre-existing condition."
Or they may find out you weren't eligible. I heard a story once about somebody who made a claim for their child, and she was remarried. Her husband was not the child's father, and the policy that he had through work didn't cover stepchildren. And no one had really asked about child/stepchild when they applied, and they were perfectly happy to get the premiums while nobody was making claims, but once the kid got sick, this got investigated, and retroactively he was taken off the policy.
According to the LA Times the new regulations would :
- Require insurers to write applications for coverage in plain English
- Allow applicants a "not sure" answer to questions about their preexisting medical conditions
- Bar insurers from dropping someone if the companies failed to thoroughly investigate an applicant's medical history before issuing a policy.
- Bar a cancellation if the patient was unaware of the medical information being sought on the application or failed to appreciate its significance.
For more info about rescission check out this episode of Frontline.
Proposal would combat rescissions of health insurance policies in California [LA Times]
(Photo:kath-leen)
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Comments:
Fantastic... We must all be tired of hearing about this form of customer abuse by insurance corporations... It is of course bullsh*t.
Show us the way California... well on this issue at least.
You should at least get your premium refunded if you are dropped...
I'm glad for this because insurance companies are daunting, and they're controlling. If no one speaks up, and if no one with authority can do anything about this, the insurance companies will drop people who made the claims to get medical care coverage (exactly what insurance is meant for) and get denied and dropped because the companies want to find a loophole.
@pecan 3.14159265: *and people will get denied and dropped...
Sigh. Edit button, please. And more coffee.
@Featherstonehaugh: That is not enough. Even if you paid $20,000 in premiums for a over few years, they would still drop you if you needed a +100K operation for instance if all that was required was to return the premiums.
What CA is trying to prevent is insurance corporations retroactively nullifying a contract at it's convenience.
Sounds too good to be true, but I hope it works.
I can see an insurance provider dropping coverage if a given condition was known to exist when the insurance was bought and never brought to the insurers attention. For example, I get diagnosed with cancer, then go buy insurance - knowing that the insurer won't cover me if they know I have cancer, I don't provide any information about the condition. Then after I get the coverage and then go in for treatment, the insurer finds out that I withheld information. That's an understandable reason for rescission.
However, combing through your records to find anything that MAY have been a symptom of your disease and there's no diagnosis of it is not a good reason for rescission.
This should be addressed at the federal level now. Having a headache doesn't mean you know you have a brain tumor. Now, if the doctor told you that you have a tumor, and you chose not to tell the insurance agency, that is another matter.
"I see you had the sniffles in 6th grade...you probably had AIDS back then too, so we are going to have to ask you to pay up for every claim since then."
It's the insurance companies responsibility to assess you prior to your enrolling with them. Once they give you the green light, its THEIR FAULT they failed to thoroughly investigate any medical conditions you made. Or how about this- they can't deny coverage for ANY pre-existing condition.
Oh, California, the shining beacon to the other 49 states (well, I suppose those Cuomo and Spitzer characters on the East Coast rank, as well) for Consumer Protection goody-two-shoesness.
If only we could deport our paleo-Conservatives to say, Mississippi, where they belong, and we'd truly be The Golden State.
PS: Dude - want some bud?
I'd also like to see an "artificially induce whatever life-threatening illness the consumer has to the insurance executive and his entire family then declare it a pre-existing condition after dumping their health insurance to see how they like them apples" to the bill.
But I'm a foolishly romantic optimist.
Regardless of all the other issues here, an insurance policy that covers children but not stepchildren is pretty gross.
I seriously don't understand how you americans put up with this kind of bullshit.
I agree with the other posters here that say that this is overdue at the federal level. This is bad faith insurance , pure and simple. Think about it : If some bean counter recinds coverage by combing through your records for "symptoms" of what they are trying to deny , then that bean counter is practicing medicine without a license by diagnosing what you MAY have had. Unless the son of a bitch has a time machine and a medical degree , he doesnt know what he is talking about.The burden of proof should fall on the insurer to prove fraud in a court of law. They should give you a thorough exam prior to coverage.
The new regulations sound great but I'm concerned that the insurance companies will find ways to circumvent; e.g., questionaires that are a mile long and exclusions of major (generally costly) illnesses from coverage based on 'evaluation' of applicant's answers and known health histories. The rates for group plans, generally exempt from individual underwriting, will go up.
In my experience the insurance companies regularly deny routine health claims, forcing the consumer to make repeated phone calls, submit additional paperwork, and keep detailed records of the entire process. When the customer gets tired of it and gives up (which I believe happens very often), the insurance company gets to keep the money. It would be nice if something could also be done to eliminate or at least decrease that practice.
If only there was some sort of system that other advanced countries used that produced better outcomes at a cheaper price that included everyone in the same pool.
That way, there'd be no financial incentive to dump sick people for the crime of getting sick.
Gosh. If only.
Alternately, if only we were Canadian.
@Shoelace: Yup. It's part of their business model. Make doctors and patients burn thru enough countless, frustrating hours to get insurers to do what they're obligated to do until some of them give up.
But hey, they're free market private parties, so it's freaken' awesome! Whoo hoo!
Thank God. Thats just horrible
I see what you did there Trai_Dep.
Good one....and I agree.
Healthy citizens = healthy taxpayers.
@mattwiggins:
Actually we try not to put up with it, but the companies have lobbied to get rid of any government organization that could mediate. Eventually you realize that you are fighting a machine which never tires and cannot be unplugged. At that point you have learned to love big business and succumb.
There's a special section in Hell for insurance providers, right next to the Hitler Wing.
Keep up your antics, insurance companies. When enough people figure out that you can retroactively drop them and change the rules, they'll begin to wonder why they're bothering with insurance in the first place. Then you'll be going the way of the newspapers.
I wanted to say something sarcastic but F it. Stories like THIS ONE are why I want to throw rocks at the right when they say "socialized medicine" will be the downfall of health care in this country.
Why? The child isn't a legal dependent of a step-parent.
My worry with this is it's going to increase the time and cost to underwrite someone for insurance. They're going to have to pull very complete records, increasing the time dramatically. Right now when the insurance company requests medical records it can take the clinics up to 3-4 weeks to get records over now. Now imagine they pull your record at one place, in those records they see you referred to another provider, then they'll pull from there, etc.
What kind of provisions are included for fraud by consumers?
@pecan 3.14159265: A previous group policy we had started investigating every single doctor visit as a potential pre-existing condition after both of us had some minor medical issues. I was wasting enough time every month to qualify as a part time job dealing with this insurance company for the six months of the pre-existing window. This is nothing compared to people who have these individual policies. They get sick and someone at the insurance company pulls one of these rescissions even if there is no merit to it. The last thing someone needs when they are fighting cancer is to be getting screwed by their insurance company.
The lack of oversight and regulation on the health insurance industry is downright criminal.
@mattwiggins: I waste way too much air trying to point out to people how flawed our system is and that other countries do make national health systems work.
The thing that really wakes some people up to the propaganda they have been fed is a big medical problem or chronic illness. Once they get to experience the US medical system and what a scam for profit insurance is they wake up quite quick.
@JGKojak: Remember that they are not a public service, they are a business. Would YOU insure someone paying $300 a month in premiums to cover their $10,000/month drug treatment bill?
Their business model is based on the healthy paying for the sick and if you force them to cover pre-existing conditions, everyone would just drop their insurance and get a new policy when they find out they are sick.
@Snarkysnake: They just hire a few C or D average in medical school doctors to rubber stamp their "plan". Everyone who graduates medical school gets to be a doctor, the one who got straight A's and the one who barely passed.
@Shoelace: Huge penalties for stonewalling patient claims. I have had many people who work in clinics tell me certain insurance companies routinely "lose" most of the claims submissions they send in.
@grossmont: That's the story of the insurance being obtained though fraud. If you lie about health conditions that would disqualify you from having the coverage in the first place, why would they pay out the fraudulently obtained coverage (unless it was past the 2 year period and incontestable)?
@morgasco: It's kind of you to worry on behalf of the poor, beleaguered insurance companies, but really, all this means is they will have to do what they should have done before - underwrite claims, instead of trying to avoid paying claims.
Fraud by consumer means recission is appropriate, same as it ever was.
@mythago: I'm not worried about the insurance companies, but you don't think they're going to pass this cost onto the consumer? That's a joke.
@Shoelace: Single payer. If you're a citizen, you're covered. No bullshit denials, mountains of forms, extra phone calls or whatever. You see your doctor, he treats you, you go home, he bills the government and gets paid.
No need for an entire industry to maintain an army of lawyers, accountants and other staff whose sole job it is to avoid paying claims. What percentage of our collective annual insurance bill goes to cover that expense? Wouldn't it be great if we had that money to spend on treating people?
We spend almost twice as much on healthcare as other industrialized countries and we get measurably poorer results. If other countries can provide quality care to all their citizens for 10% of GDP or less, we should be able to do likewise.
@dfwguy: Not to mention a populace that's been brainwashed into believing that single payer healthcare = nazi germany.
@sleze69: Your pre-existing condition - a lack of reading comprehension - can be treated with enough effort and prayer.
@redskull: That'll scare 'em. They've got the government in their pocket and no one in their right mind that has a child would just stop "bothering" with insurance.
These policies were well-documented in Sicko, but what can you do about it? Every time someone tries to change laws around health care they're labeled by pundits as socialist scum.
@HiPwr:
Honestly, if I compared the government healthcare of most countries to what we have in America...many of them would be found to be better...some would be worse....and most of them would be cheaper.
Nevermind the fact we are basically the last industrialized nation to go to nationalized healthcare...and the only reason we don't is basically lobbies from insurance companies.
Shit like this is what makes the "it would put private insurers out of business" argument against public health insurance laughable. I mean it takes my response from "so what?" to "good riddance."
@ThinkerTDM: "For once?!
Pecan 3.14 is agree-a-riffic!
And she's got one of the coolest handles here. Yeesh!
I generally hate California's needlessly overprotective laws, but I think this is appropriate.