Insurers revoke policies to avoid paying...

[Der Bücherwurm 1]

Insurers Revoke Policies To Avoid Paying High Costs

by Joanne Silberner

Morning Edition, June 22, 2009 · According to a new report by congressional investigators, an insurance company practice of retroactively canceling health insurance is fairly common, and it saves insurers a lot of money.

A subcommittee of the House Energy and Commerce Committee recently held a hearing about the report's findings in an effort to bring a halt to this practice. But at the hearing, insurance executives told lawmakers they have no plans to stop rescinding policies.

The act of retroactively canceling insurance is called rescission. It happens with individual health insurance policies, where people apply for insurance on their own, not through their employers. Their application generally includes a questionnaire about their health.

The process begins after a policyholder has been diagnosed with an expensive condition such as cancer. The insurer then reviews the health status information in the questionnaire, and if anything is missing, the policy may be rescinded.

The omission from the application may be deliberate, to hide a health condition that might have made the applicant ineligible for insurance. But sometimes there's an innocent explanation: The policyholder may not have known about a health condition, or may not have thought it was relevant.

The rescissions based on omissions or immaterial conditions incensed many lawmakers.

"I think it's shocking, it's inexcusable. It's a system that we have in place and we've got to stop," Energy and Commerce Committee Chairman Henry Waxman (D-CA) said at the hearing.

From the other side of the aisle, Rep. Joe Barton (R-TX) was also appalled.

"Doesn't it bother you to do this?" he asked Don Hamm, CEO of Assurant Health, who appeared with the CEOs of UnitedHealth's Golden Rule Insurance Co. and WellPoint's Consumer Business.

Losing Insurance At A Critical Time

Hamm's insurance company rescinded the policy of Otto Raddatz after he was diagnosed with lymphoma. Raddatz had not told the company about a CT scan by a now-retired doctor that showed gallstones and a weakened blood vessel.

That's because he didn't know about the findings, his sister Peggy Raddatz, an attorney, testified. She spent weeks on the phone and ended up at the Illinois Attorney General's office, which began an investigation. The retired doctor turned out to be off on a fishing trip.

"Luckily, they were able to find the doctor, who was able to say, 'Yes, I never discussed those issues with him; they were very minor,' " Raddatz testifed.

After Minor Misunderstanding, A Policy Revoked

One of Barton's constituents, Robin Beaton of Waxahachie, Texas, did know that her health history included acne and a rapid heartbeat. But she didn't think they were relevant to her current health and left them off her application.

After she was diagnosed with breast cancer and was scheduled for a double mastectomy, her insurer cancelled her policy, leaving her devastated.

"I had to completely refocus on what to do, where to turn, because my insurance canceled me," she said. Beaton called Barton's office, which started a series of phone calls to her insurer. It took a call from Barton himself to get her reinstated.

Committee investigators found a total of 19,776 rescissions from three large insurers over five years. The rescissions saved the insurers $300 million.

Insurers Say They Won't Change Rescission Practice

During the hearing, Barton asked Hamm how he felt hearing the three cases of people who'd been burned by rescission.

"I have to say I felt really bad," Hamm replied.

"It's my hope there will be changes made that this will no longer be necessary," he said. His hope, and that of the other insurance company CEOs who testified, is that a health care overhaul will mean that everyone has insurance. If that were the case, people couldn't wait until they got sick to apply, and insurers wouldn't have to worry about whether someone had lied on an application.

Several lawmakers at the hearing suggested there were things the companies could do right now: They could vet applications when they receive them, rather than waiting until people get sick; they could consider whether something that was omitted was related to a current health condition before rescinding; and they could be more careful to positively identify fraud before rescinding a policy.

Rep. Bart Stupak (D-MI), who chaired the hearing, asked all three CEOs if they would agree to stop rescinding policies except in cases of fraud.

All three said no.

If they don't do something to stop it, said Barton of Texas, Congress will.

articleonnpr.org

These greedy insurance companies should be made to repay these individuals. To me, health care is a basic human right and I hope there will be a public option for health care in the near future.

[Heracles 417]

I would like to see someone defend this. It's like the wild wild west for these guys. Choose who to cover, what to cover, how to cover, where to cover and then in the end may even say, "sorry butter luck next life".

I saw just how well the system works after I have to forked out $700 bucks for a 'procedure not covered'. One thing is for sure, if I was to come down with anything serious, I'd be on the first flight to AUS. God help people who are terminally ill here. They're ######.

Between these guys, frivolous malpractice lawsuits and pharmaceutical companies; we're ######.

Edited June 22, 2009 by Constellation

[ready4ONE 5,400]

I would like to see someone defend this. It's like the wild wild west for these guys. Choose who to cover, what to cover, how to cover, where to cover and then in the end may even say, "sorry butter luck next life".

I saw just how well the system works after I have to forked out $700 bucks for a 'procedure not covered'. One thing is for sure, if I was to come down with anything serious, I'd be on the first flight to AUS. God help people who are terminally ill here. They're ######.

Between these guys, frivolous malpractice lawsuits and pharmaceutical companies; we're ######.

There is not defense of this, beyond the usual "Obama will turn us into a Socialist Dictatorship" mumbo jumbo... Mr Hamm is paid too well to lose too much sleep over rescission decisions.

http://people.forbes.com/profile/donald-hamm/7966

Ah the magic of free market capitalism!

[mendeleev 68]

I remember Joe Barton -- I lived in his district about 20 years ago when he campaigned on, among other things, term limits. This guy is slightly to the right of Atilla the Hun, with a correspondingly high integrity factor.

But if even he gets incensed about this sort of insurance company abuse, Congress will probably find the will to change it.