Insurance Executives Tell House Panel They Won’t Limit Rescissions
At a House Energy and Commerce Subcommittee on Oversight and Investigations hearing on Tuesday, executives from three of the nation's largest health insurers would not commit to limiting policy rescissions only to people who intentionally lied or committed fraud to obtain coverage, the Los Angeles Times reports.
The refusal by the insurer executives -- Richard Collins, CEO of UnitedHealth Group's Golden Rule Insurance; Don Hamm, CEO of Assurant Health; and Brian Sassi, president and CEO of consumer business for WellPoint -- was "met with dismay from legislators on both sides of the political aisle," according to the Times (Girion, Los Angeles Times, 6/17).
House Energy and Commerce Committee Chair Henry Waxman (D-Calif.) said a subcommittee investigation found that the individual insurance market is "fundamentally flawed" because insurers are able to deny coverage to applicants with pre-existing conditions.
Some insurers also investigate policyholders who become ill and review patients' records looking for omissions or misstatements that can be used to cancel coverage (Norman, CQ HealthBeat, 6/16).
According to the investigation, WellPoint, UnitedHealth and Assurant rescinded the policies of more than 20,000 people over a five-year period, which allowed the companies to avoid paying more than $300 million in medical claims.
The investigation also found that policyholders with breast cancer, lymphoma and more than 1,000 other conditions were targeted for rescissions, and that employees who rescinded coverage of patients with costly diseases were praised in performance reviews (Los Angeles Times, 6/17).
Rep. Greg Walden (R-Ore.) said that insurers "playing 'gotcha' with policyholders who have serious illnesses and huge expenses must stop" and that insurers should verify applicants' medical histories before issuing policies (CQ HealthBeat, 6/16).
Committee ranking member Joe Barton (R-Texas) said, "I think a company does have a right to make sure there's no fraudulent information," but "if a citizen acts in good faith, we should expect the insurance company that takes their money to act in good faith also" (Los Angeles Times, 6/17).
In written testimony, Sassi said that the insurer's rescission process is as fair and accurate as it can be. He said, "In a market where individuals can choose to purchase insurance at any time, health insurers must medically underwrite applicants for current health risk," adding, "If an individual buys health coverage only when he or she needs health care services, the system cannot be sustained" (CQ HealthBeat, 6/16).
Sassi added, "I want to emphasize that rescission is about stopping fraud and material misrepresentations that contribute to spiraling health care costs" (Los Angeles Times, 6/17). According to Sassi, rescissions affect a small portion of customers in the individual market, with WellPoint rescinding 1,275 policies out of 873,000 new plan members in 2008.
In written testimony, Hamm said that insurers must analyze risk through the underwriting process before offering applicants coverage. He said, "Without doing so, the cost of coverage for all insurance would increase," adding that policyholders whose coverage has been rescinded have multiple opportunities to appeal the decision and in some cases are offered other coverage options (CQ HealthBeat, 6/16).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.